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Level 1
posted Jul 6, 2020 10:53:33 PM

I sold my rental in 2019. Where do I enter improvement cost before I converted my main home to rental?

In 2019, I sold my rental property which was my main home until 2017. Where do I enter improvement cost before I converted my main home to rental in 2017? I don't see anywhere I can enter that information in "EasyStep", but when I tried to add the items under the section "Increases to Basis" on the "Adjusted Basis of Home Sold Worksheet" in "Forms", it had no effect.

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1 Best answer
Employee Tax Expert
Jul 7, 2020 1:41:48 PM

You will need to enter the improvements in the Asset section of the rental activity as follows in the federal interview section.

  1. Select Income & expenses 
  2. Scroll down to see All Income and select Rentals, Royalties, and Farm
  3. Select Rental Properties and Royalties (Sch E) 
  4. Select Edit Another Rental or Royalty property as prompted.
  5. Select Yes to review your rental and royalty information
  6. Continue through the screens until you see the page titled Rental and Royalty
  7. Select Edit to the right of the rental activity
  8. On the next screen, select Assets/Depreciation and enter your improvements in this section. 

They will then be included to help determine your cost basis for the sale of the rental property.

 

2 Replies
Employee Tax Expert
Jul 7, 2020 1:41:48 PM

You will need to enter the improvements in the Asset section of the rental activity as follows in the federal interview section.

  1. Select Income & expenses 
  2. Scroll down to see All Income and select Rentals, Royalties, and Farm
  3. Select Rental Properties and Royalties (Sch E) 
  4. Select Edit Another Rental or Royalty property as prompted.
  5. Select Yes to review your rental and royalty information
  6. Continue through the screens until you see the page titled Rental and Royalty
  7. Select Edit to the right of the rental activity
  8. On the next screen, select Assets/Depreciation and enter your improvements in this section. 

They will then be included to help determine your cost basis for the sale of the rental property.

 

Level 1
Jul 9, 2020 2:10:12 PM

Thank you for your response.

 

Frankly, the whole flow is very confusing. It asks me again to check whether I discarded or sold the improvement and when I discarded or sold it, etc, for each one of the improvements, even though all the improvements of the property are obviously part of the home sale. It makes me wonder whether that is the correct place to enter improvements to the property.