topic Residential Rental Property Improvements in Investors & landlords

Residential Rental Property Improvements

dlschroedr — Tue, 10 Mar 2026 07:27:47 GMT

I have a Residential Rental Property owned and rented by myself. I replaced the roof and furnace about a month before I sold it about one month later. I entered these two improvements into the tax software as Depreciable Property. When entering these two improvements into a tax software I need to enter the sales price. However, the house sales price included the sale of these two improvements. How do I determine the sale price of these two items or can I just enter "0"?

Re: Residential Rental Property Improvements

Mike9241 — Mon, 05 Dec 2022 23:30:45 GMT

since these were installed so close to the date sold I would allocate enough of the net sales price (sales price less a prorata share of selling expenses) to equal the original cost. so the only gain is equal to the depreciation allowed.

Re: Residential Rental Property Improvements

dlschroedr — Mon, 05 Dec 2022 23:37:55 GMT

So to clarify. I would then also when entering the sales price of the House, I would first subtract the cost of each of the items (plus a prorated share of the selling expenses) from the amount that I received from selling the house?

Re: Residential Rental Property Improvements

Mike9241 — Mon, 05 Dec 2022 23:41:27 GMT

yes. so in total you don't report more than the actual sales price and selling expenses.

Re: Residential Rental Property Improvements

dlschroedr — Mon, 05 Dec 2022 23:46:10 GMT

Thanks

Re: Residential Rental Property Improvements

Critter-3 — Tue, 06 Dec 2022 00:47:16 GMT

Ok ... if an asset is placed into service AND sold in the same tax year then you will add the cost as a repair on the Sch E and leave the entire sales price & cost of sale be be allocated on the assets already listed. You do NOT need to prorate the sale for these items.

Re: Residential Rental Property Improvements

dlschroedr — Tue, 06 Dec 2022 16:18:10 GMT

Ok after reading Critter-3's message I found the following in IRS Publication 946 "• Even if the requirements explained in the preceding discussions are met, you cannot depreciate the following
property.
• Property placed in service and disposed of in the
same year.

So are these assets clamed as repairs?

Re: Residential Rental Property Improvements

Critter-3 — Tue, 06 Dec 2022 16:27:52 GMT

YES ... after 30+ years in the business, being an enrolled agent & having taught the H&R Block income tax courses for many years the correct place to put them is on the Sch E in the year of a sale. That is how you get the deduction for it ... there is no other place to put it.