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I purchased a home in 2008. In 2014, turned into a rental . Sold house in 2019. Where do I enter the home improvements completed between 2008 and 2014? (is it the Cost)?

 
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2 Replies
MaryK4
Expert Alumni

I purchased a home in 2008. In 2014, turned into a rental . Sold house in 2019. Where do I enter the home improvements completed between 2008 and 2014? (is it the Cost)?

Yes, you will add any improvements done before the conversion to rental property as an adjustment to basis which will increase the cost and decrease the amount of tax due from the sale.

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Anonymous
Not applicable

I purchased a home in 2008. In 2014, turned into a rental . Sold house in 2019. Where do I enter the home improvements completed between 2008 and 2014? (is it the Cost)?

if you added improvements before the rental period, if you haven't been depreciating them you have a problem.   the IRS says that you have to compute the depreciation that would have been taken during the rental period and thus report recapture of that amount upon sale.   correction for not taking it requires filing form 3115.    this is something you may need to leave to a pro.   

 

there is an out. if the Fair Market Value  on the date you started  renting was less than the cost of home and improvements, then if you computed depreciation using the lower FMV you have done it rcorrectly and there would be no need to depreciate the improvements. their cost then would be added to the original cost of the property   

 

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