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maskrunner2
Level 2

sold rental property

I sold a rental property in 2019 (april). I renovated and spent about $20,000 on improvements such as new kitchen cabinets/granite counters, new flooring and carpet in entire house, new garage doors and openers, new interior doors. Since these were done Jan- March 2019, they were obviously never depreciated. Do I have to list each one in the asset/depreciation area. Im not seeing anywhere to just add it to my cost basis now that I sold the property. Since there not really repairs (except maybe painting) where do I put the cost of these improvements ?

Steve

5 Replies
Carl
Level 15

sold rental property

where do I put the cost of these improvements ?

You still enter them in the assets/depreciation section. The in-service date will be the closing date of the sale, and the business use percentage will be zero percent. If the program "insist" on a digit above zero percent, then enter 1% and press on. If any depreciation is taken, it won't be more than a few bucks and will have no impact on your tax liability.

 

 

Critter
Level 15

sold rental property

Since they were done in the year of sale you can enter them as repairs on the Sch E ... do NOT enter them in the asset section. 

KrisD15
Expert Alumni

sold rental property

Add the improvements into the basis of the property. 

 

When you report the sale, you should have an opportunity to add the amount. 

 

If it was a rental at the time of the improvements, list each improvement as an asset to the rental. (paining would be an expense). Next, allocate the sales proceeds to the rental and each improvement. The easiest way is to allocate the sale to the assets to zero them out and the rest to the building, OR allocate as a percentage of each. (so if the property is 80,000 and the improvements were 20,000, allocate the sale 80% and 20%)

 

PLEASE CLICK THIS LINK for more about rentals and improvements

 

@maskrunner2

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Critter
Level 15

sold rental property

Improvements made in the same year as the sale are not listed as assets ... either enter them as an expense on the Sch E  or  add to the cost basis or cost of sale ... all of these will get you the same result. 

tagteam
Level 15

sold rental property

I have to agree with @Critter; do not list the improvements as assets. 

 

You cannot take depreciation deductions for property placed in service and disposed of in the same tax year.

 

See https://www.irs.gov/taxtopics/tc704

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