Where do I input past home improvement expenses into TurboTax to increase the basis value of the home which I sold last year?

[al_li_2020]

I bought a home in 2011, and did some home improvement in 2012 for which I spent about $10000.   In 2017 I had to relocate to another state for a new job, and I changed the home into a rental property. Then I sold the home in 2020. Over the years I didn't report the home improvement in tax returns.  Now my question is , is it possible for me to add the home improvement expenses back on the 2020 tax returns to increase the basis value of the home , so that I can reduce the capital gain for the sale of the rental property? If this is possible, how can I do it in TurboTax?

Thank you very much.

[ColeenD3]

Yes. Add them to the basis. If you had rental income in 2020, you will enter all your information in the Rental Section. You will be asked about cost and improvements.

If you did not have rental income, enter it in Sale of Business Property.

1) Wages and Income

2) Other Business Situations

3) Sale of Business Property

4) Other Property Sales

5) Select Sales of Business or Rental Property that you haven't already reported

6)Choose No to the question, "Do all of the following apply to the property you sold?".

7)Choose Yes to the following screen that asks, "Do any of the following descriptions apply to the items you sold?".

8)Select the type of property from the drop down box.

9)Enter the information for your sale.

[al_li_2020]

Thank you for your reply. I did have rental income in 2020, but in the rental section, turbotax was asking if I had any improvement in 2020. My home improvement work was actually done in 2012. I am not sure if I still can input this information there. Please advise.

Thank you.

[ColeenD3]

Since you never did include the improvements for depreciation, you have two choices. You can omit them or you can use form 3115 to include them. TurboTax does not support this form.

Below are the IRS links related to the change in accounting method. TurboTax does not have that form.

May be these will help

Form 3115, Application for Change in Accounting Method

Form 3115

Instructions for Form 3115 (03/2012) 

Instruction for 3115

Form 3115,

Form 3115 pdf

[al_li_2020]

Thank you for this information. It sounds complicated.  I will do some research and see if I can handle it.

Thanks a again!