Land imrovements to rental property

[billr10000]

Where do I enter land improvements to my rental condo for the purpose of adding them to my basis. The condo association purchased the beach frontage and financed it over a number of years, assessing this cost to owners. They also had to do a significant upgrade to the water supply system (well and storage)  and handled it the same way. Both of these I would assume increased the value of the land and therefore were not depreciated. Do I just add their cost to the cost of land on the asset entry work sheet?

Thanks

[AmeliesUncle · Accepted solution]

Yes, you could just add the additional land to the land (assuming the new land was owned for more than 1 year)

As for the water/well, that is a depreciable improvement, and you need to have been depreciating that.  If it has been several  years of not depreciating it, you should go to a tax professional to 'catch up' on the depreciation.

[Carl]

While the value increase to your property due to your share of the well improvements are depreciable, the value of your land improvements is no. Here's how to "correctly" add this to the cost basis of the property in TurboTax, so that you can continue to use TurboTax without having to do anything special and without having to change any existing figures. (Changes to existing figures *WILL* screw up the depreciation.)

In the Assets/Depreciation section click the button for Add Another Asset.

Classify this asset as Residential Rental Real Estate (I assume that's what it is) and enter an appropriate description when asked to discribe the asset.

In the Cost box, enter the TOTAL AMOUNT OF ALL IMPROVEMENTS that is your share.

In the Cost of Land box, enter the amount of land improvements that are not depreciable.

Make your "in service" date whatever date the work was done, or the date the asset(s) was placed in service.

Now the program will "do the math" by subtracting the "Cost of Land" from the amount in The "cost" box. The difference between the two is depreciated over the next 27.5 years, while the value of the land is not depreciated, since it should not be.

This will correctly increase your cost basis without you having to go around your elbow to get to your thumb, and most importantly, it will not screw up the existing depreciation.