Upgradees to rental property prior to sale

[krjohnson]

This is a follow-on to another question - Re: Sale of rental property

I sold a rental condominium in December 2024.  Beginning in October, I made a number of upgrades and renovations to the property to prepare it for sale.  I'm struggling with how to enter these expenses in Turbo Tax Premium Desktop, as I want them to be included in the cost basis.    Using the step-by-step approach, it doesn't look like TT is doing this.

[DianeW777 · Accepted solution]

It depends. In the step by step, you can enter these improvements that were done between October and before the sale as sales expenses to make them inclusive to determine the actual gain on the sale.  There is another way however this makes sense and provides the same results with less work on your part. You can use the information below to help allocate the selling expenses and selling price for the assets.

Example of arriving at the selling price and sales expenses for each asset in your rental activity.

Example:  Original Cost (of each asset on your depreciation schedule)

$10,000 Land                = 13.33% (Carries a more favorable tax treatment)

$50,000 House              = 66.67%

$15,000 Improvements  = 20%

$75,000 Total                 = 100%

Multiply each percentage times the sales price/sales expenses to arrive at each individual sales price/sales expense.