The most important issue to clarify before you finalize your tax return is to make sure you did not include the repairs twice.
Since your expenses are less than $2,500 and you did NOT add them as capital improvements in the asset section, then you are writing off the expense under rental income and expenses. This is what the 'Safe Harbor' is all about. You answered the questions to indicate you wanted to make this choice.
After making the choice then the expenses you have chosen to use under Safe Harbor are recorded under miscellaneous expenses in the rental activity section (as you stated above Rental Income and Expenses). Check your entry by following the steps here. DO NOT enter this same expense as an asset. These instructions show you the original question and how to enter the expense when this option is chosen.
To record this in TurboTax use the following steps.
- When you come to the screen, under Assets (no you don't want to go directly to the asset summary) Did you buy any items that each cost $2,500 or less in 2020? mark the Yes button and click Continue.
- On the screen Let's see if you qualify to deduct these items as expenses, mark both of the Yes buttons and click Continue.
- On the Now, let's review each item you bought screen, mark whether all your new assets cost $2500 or less.
- If you mark that every item cost $2,500 or less, you will be brought to the Asset Summary screen. You have elected the De Minimis Safe Harbor provision.
- Here's how to add your purchases that are $2,500 or less as Miscellaneous Expenses:
- Select Common Expenses (may have to select 'Show More') Continue and then Add expenses for this work.
- Choose Other miscellaneous expenses.
- Description (Safe Harbor-iPad) and amount
Do NOT add these expenses again as part of the sale. They are already used to reduce income at 100% of cost and are NOT part of the sale in this situation.
Lastly, follow the instructions above to enter your rental sale of the original assets (land, building) if they are not shown in your tax return as assets on your rental property. If they are listed as assets in TurboTax, then in the Asset section select each asset and indicate they were sold, enter the requested sales information and TurboTax will complete the sale for you.
The selling price should be prorated for each asset then entered for each asset when you indicate they were sold or disposed of. You will not lose the remaining depreciation because you will use the remaining basis against the selling price to determine gain or loss.
To figure out the selling price for each asset:
- Take the current basis of each asset against the total combined basis of all of your assets to figure out the sales price for each one; OR
- Determine a fair market value for each asset against the total value of all assets to figure out the sale price for each one.
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