where do I enter cost basis on rental property we built

[mountainlover1]

We built a rental apartment on our property, completed in 2021 and began renting in May, 2021. We need to declare the cost basis based on our building costs (building materials, etc), but there doesn't seem to be an option in Turbo Tax for doing so when the property was built, not purchased. Where do I enter this information?

[HelenC12]

Enter your cost basis under the "purchased" option. On IRS Form 4562, Depreciation and Amortization, all the IRS requires is your basis for depreciation. One way to look at it is, you had to purchase all the materials and pay for (purchase) the labor. 

Additional information: Where do I enter income and expenses from a rental property?

[mountainlover1]

Thank you. A couple of questions... In Turbo Tax, the purchase option asks for purchase date, escrow fees, etc. These do not apply in our situation. For the purchase date, do we use the date when construction began or the date of completion?  Do we indicate $0 for the escrow questions? 

A turbo tax phone advisor told me to list this as a room addition and list the building costs as "room additions total".  This seems to work, as the result shows our building costs as our depreciable cost basis. 

[Critter-3]

For the purchase date, do we use the date when construction began or the date of completion? Date when you get the certificate of occupancy. 

Do we indicate $0 for the escrow questions? Just skip those sections you don't need ... do not enter a bunch of zeros.

[mountainlover1]

Thank you! This is really confusing since Turbo Tax doesn't offer an option for calculating cost basis on a property that was built by the owner. It would be nice if they would add that option! (I have spent 2 hours on the phone today with Turbo Tax help, and finally someone figured out a possible solution).