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V-Coach
Returning Member

rental renovation

after inputting rental renovation in turbo tax what form should i see it appear on? "in forms" if I did it right

10 Replies
ColeenD3
Expert Alumni

rental renovation

If you are depreciating an asset placed in service in 2019, you would see evidence of it on Form 4562 and your depreciation worksheet.

 

@V-Coach

V-Coach
Returning Member

rental renovation

i renovated so i could sell the property. So on turbo tax i selected claim the full amount this year ($21k)

 

I also selected in rental main info that it property was sold/disposed of.

 

I went through the whole rental section but nothing asking for any purchase and sale prices and costs.

 

Do you know where that section is?

DeanM15
Expert Alumni

rental renovation

After you make the selection in the Property Profile section, you would then go onto questions in the Asset/Depreciation section about the sale.

 

The Asset/Depreciation is where you would enter the sales price and expenses of the sale. You would enter the improvements depreciation section for the home.  

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V-Coach
Returning Member

rental renovation

Do i include the mortgage payoff in the cost of sale?

DeanM15
Expert Alumni

rental renovation

No, you do not include the mortgage payoff in the costs of the sale.

 

The payoff of your loan is not relevant to the taxation of the sale of the property or the capital gain or loss that you have.

 

@V-Coach.  

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V-Coach
Returning Member

rental renovation

Still need help.

 

Lets get more specific:

 

I purchased at $  193,822

sold at               $  295000

sale costs          $    12920

diff of                 $    88258  that i gained but Turbo tax says $ 137000 gain

 

but what i question is the gain doesn't show up on the rental summary as a gain. It shows the losses for the year because of renovation.

 

Is the capital gain showing up somewhere else?

Is there a form i should check to verify?

V-Coach
Returning Member

rental renovation

BTW thank you for helping me.

 

after my years of losses and a reno to sell the property my gain is 39K

 

Where should that show up on my income

DianeC958
Expert Alumni

rental renovation

The gain from the selling of the rental property will show on Line 7a of the form 1040.

 

The amount flows from Schedule 1, Line 4 to the form 1040.

 

@V-Coach

 

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Carl
Level 15

rental renovation

I purchased at $ 193,822

sold at $ 295000

sale costs $ 12920

diff of $ 88258 that i gained but Turbo tax says $ 137000 gain

 

Correct. When you sell the property, you are required by law to recapture all prior depreciation taken and pay taxes on it in the year you sell. The depreciation recapture also adds to your AGI and has the potential to put you in a higher tax bracket too. Let's start from the beginning.

 

Your renovations are more than likely property improvements. Here's the deal on that.

Property Improvement.

Property improvements are expenses you incur that add value to the property. Expenses for this are entered in the Assets/Depreciation section and depreciated over time. Property improvements can be done at any time after your initial purchase of the property. It does not matter if it was your residence or a rental at the time of the improvement. It still adds value to the property.

To be classified as a property improvement, two criteria must be met:

1) The improvement must become "a material part of" the property. For example, remodeling the bathroom, new cabinets or appliances in the kitchen. New carpet. Replacing that old Central Air unit.

2) The improvement must add "real" value to the property. In other words, when  the property is appraised by a qualified, certified, licensed property appraiser, he will appraise it at a higher value, than he would have without the improvements.

So your property improvements are first entered in the Assets/Depreciation section.

If you did these improvements after the last renter moved out and before you closed on the sale of the property, that means those improvements were *NEVER* placed "in service" as a rental asset. However, the program will not accept 0% business use. Therefore, you need to make the "in service" date, the date you closed on the sale. The business use percentage will be 1%.

After you do that and finish working through the *ENTIRE* rental property, you need to work through it a 2nd time to report the actual sale of the property. Here's the guidance for that.

Reporting the Sale of Rental Property

If you qualify for the "lived in 2 of last 5 years" capital gains exclusion, then when prompted you WILL indicate that this sale DOES INCLUDE the sale of your main home. For AD MIL personnel who don't qualify because of PCS orders, select this option anyway, because you "MIGHT" qualify for at last a partial exclusion.

Start working through Rental & Royalty Income (SCH E) "AS IF" you did not sell the property. One of the screens near the start will have a selection on it for "I sold or otherwise disposed of this property in  2019". Select it. After you select the "I sold or otherwise disposed of this property in 2019" you continue working it through "as if" you still own it. When you come to the summary screen you will enter all of your rental income and expenses, even it it's zero. Then you MUST work through the "Sale of Assets/Depreciation" section. You must work through each individual asset one at a time to report its disposition (in your case, all your rental assets were sold).

Understand that if more than the property itself is listed in your assets list, then you need to allocate your sales price across all of your assets.  You will only allocate the structure sales price; you will NOT allocate the land sales price, since the land is not a depreciable asset.  Then if you sold this rental at a gain, you must show a gain on all assets, even if that gain is $1. Likewise, if you sold at a loss then you must show a loss on all assets, even if that loss is $1

Basically, when working through an asset you select the option for "I stopped using this asset in 2019" and go from there. Note that you MUST do this for EACH AND EVERY asset listed.

When you finish working through everything listed in the assets section, if you ever at any time you owned this rental you claimed vehicle expenses, then you must also work through the vehicle section and show the disposition of the vehicle. Most likely, your vehicle disposition will be "removed for personal use", as I seriously doubt you sold your vehicle as a part of this rental sale.

V-Coach
Returning Member

rental renovation

sounds good

 

so i have 2 schd E (2 properties) i think the combination of line 2 on both move to schd 1 line 9 (which is recovering losses from the 2 properties. 

 

i think it is equal to the gain and the rest is carried forward on propoerty #2 into next year as a Schd E suspended loss ?

 

schd 1 line 9 is moved to line 7a on 1040 and is subtracted from line 6 (1040)

 

That is washing out my capital gain so i dont see a gain. I think??

 

take your time to think about this one im complicated

 

so are both my schd E losses being absorbed into the capital gain?

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