sale of rental property

[brookfield1]

My renter moved out in June, 2023.  I decided to renovate and sell it.  I have owned the property for 20 years and used it as a rental from the beginning.  Renovation started in July, finished in September, and sold on 10/30, 2023.

1.  Should the property be considered a rental after the renter moved out during renovation and during the period held for sale?  TurboTax asked if it has been rented all the year.  Should I answer 180 days (to the end of June) when the renter moved out, or 300 days (to the end of Oct. when sale closed escrow?

2.  Should maintenance expenses be added to renovation costs?  The rental was broken into by squatters and I had to install surveillance service.

Thanks to the community and experts for helping me out.

[DianeW777]

The sale of your rental entry in TurboTax and your questions will be answered here.

1. Yes, it would be considered as a rental during that temporary period of renovation. You would answer that it was rented all year because the depreciation will be limited to the date of sale when you enter that. Do not enter any days, only that it was rented 100% of the year.
2. Maintenance is not added to the cost basis, it is an expense. 
   1. Add any capital improvements to your sales expense for the house so that they are included with the cost basis for the sale. You cannot add this improvement as an asset since it was done in the same year as the sale.

Use the original cost of each asset listed on depreciation, add those together then divide each one by the combined total to find the percentage of the cost for each asset.  Use that percentage times the sales price and sales expenses to find the selling price/sales expenses for each asset. (Choices would also be fair market value on the date of the sale or adjusted basis on the date of the sale, which is cost less depreciation.)

Example:  Original Cost (of each asset on your depreciation schedule)

$10,000 Land                = 13.33% 

$50,000 House              = 66.67%

$15,000 Improvements  = 20%

$75,000 Total                 = 100%

Multiply each percentage times the sales price/sales expenses to arrive at each individual sales price/sales expense.  I hope this example provides clarification to enter your sale. 

You need to dispose of the property by telling TurboTax how and when it was disposed of.  Follow the instructions below.

1. Click on Wages & Expenses
2. Scroll to Rental properties and royalties, click Edit/Add or Start/Revisit
3. Do you want to review your rental?, click Yes
4. Under Rent and Royalty Summary, click Edit
5. Click Update to the right of Assets/Depreciation.
6. Do you want to go directly to your asset summary?, click Yes and Continue
7. Click Edit to the right of each asset to be disposed of/sold
8. Go through several screens until you get to Tell Us More About This Rental Asset
9. Click on This item was sold…….   And continue to answer the questions

You might also review information here.