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Where should I declare my expenses related to preparing my rental house for sale?

In 2024 I sold my rental property.
Where should I declare my expenses related to preparing the house for sale?
Should they go under Schedule E or under Sale of Business Property (Cost of Property plus expenses of Sale)?
I had carpet installed, a dishwasher, an oven, painted inside and out, repaired dry rot, and had a contractor install lights, fans, faucets, and the appliances.

 

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1 Reply
KrisD15
Employee Tax Expert

Where should I declare my expenses related to preparing my rental house for sale?

If they are expenses to prepare your house for sale, they are not claimed anywhere. It is assumed you received compensation for those items in the sales proceeds. Only improvements could be added to your basis/cost of the home. Improvements are things that are "added" to the house, not things that are maintained or repaired. 

 

If they were done while it was still an active rental, they would be claimed on Schedule E. 

 

TurboTax link, "What is an improvement"

 

IRS link "Selling your home" 

"Examples of improvements you CAN’T include in your basis. You can’t include:

Any costs of repairs or maintenance that are necessary to keep your home in good condition but don’t add to its value or prolong its life. Examples include painting (interior or exterior), fixing leaks, filling holes or cracks, or replacing broken hardware.

Any costs of any improvements that are no longer part of your home (for example, wall-to-wall carpeting that you installed but later replaced).

Any costs of any improvements with a life expectancy, when installed, of less than 1 year."

 

 

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