Hi, we did numerous things to our rental property in the months before selling it (after we had our tenant move out), such as new sod and landscaping, repairing floors, repainting walls, replacing faucets & light fixtures, etc. Would I enter this under rental expenses for the property, or would I enter them as a cost of sale when I report the sale? Or does either area work?
You'll need to sign in or create an account to connect with an expert.
If the property was not available to be rented (or you had no plans to rent it again), any repair costs you incurred before you listed the property increase the basis of the property and reduce any gain on the sale. You would enter these costs as a separate Rental Asset (improvements), which would qualify for depreciation if the sale didn't occur in the same year.
Because you can't claim depreciation on assets added and sold in the same year, you may wish to consider the Safe Harbor Election for Small Taxpayers. TurboTax will ask you about this election under the Assets/Depreciation section of your Rental Property. If you qualify for this election, you can expense up to $10,000 in costs that would otherwise be depreciated over a very long time. If you choose the Safe Harbor Election, the repair costs would NOT be added to your basis in the property.
During the period before the former rental is sold, the mortgage interest would be considered Investment Interest Expense. This is an Itemized Deduction on Schedule A.
Any repairs needed in order to close the sale may be included in Selling Expenses.
Additional Information:
Still have questions?
Make a postAsk questions and learn more about your taxes and finances.
Fuzzy Red Baron
Returning Member
JMB011
New Member
cabg
New Member
taxquestion222
Returning Member
MellowStudent
Level 1
Did the information on this page answer your question?
You have clicked a link to a site outside of the TurboTax Community. By clicking "Continue", you will leave the Community and be taken to that site instead.