Sale of investment property

[skibum11]

I have recently sold a non-owner-occupied single-family rental property.  It was rented for a number of years.  At no time did I ever live in the home.  In 2024 there has been zero rental income as I rehabbed the property for sale.  My questions are related to the expenses of ownership incurred in 2024.  I assume that the expenses itemized on the Settlement Statement will be deducted from the sale price.  I also assume that the cost of my improvements to the property will be added to my depreciated Cost Basis in calculating my net gain on the sale.  How do I treat the Utilities, Property Taxes, Insurance, and other expenses (not improvements) incurred this year as owner of the property?  Are these expenses treated as a cost of sale?  Are they added to my Cost Basis?  Are they reported on Schedule E for 2024 personal tax return even though there was zero rental income?  Thank you.

[NateTheGrEAt]

With respect to work done on the property, improvements are capitalized and added to your basis. Repairs are not capitalized and are not deductible if the property is not being used as a rental or in a trade or business. IRS Publication 527 talks about the difference between improvements and repairs. 

Sales expenses are deductible. Here is a discussion about what constitutes a sales expense. 

You may be able to capitalize property taxes, interest, and "carrying charges" under Section 266 for real property. Here is a link to the relevant regulations. 

Note that, to do this, you must attach a statement to your return stating that you are making the election, which means that in TurboTax Online, you may need to file your return by mail. 

Be sure to account for all depreciation that you took or could have taken. This amount will be considered "unrecaptured Section 1250 gain" on your upcoming tax return. If you forgot to take the full amount of eligible depreciation, be sure to file Form 3115 with your tax return for this year so you can make the retroactive adjustment and not pay tax on depreciation you never benefited from taking. 

[richardR1]

There wont be a broker's statement just the statement showing paying overseas capital gains taxes, legal fees, accounting fees etc. Which form is that being entered. 

Same year selling personal home property using the 500K exclusion. wont need all of it but assume some cannot be used for the investment sale (but can offset with capital losses from stock)

[DianeW777]

The form would be Schedule D and considered a sale of an investment property, assuming it wasn't used as a rental or other business activity.  Have the cost, selling price, and purchase/sale expenses ready for your entry.  It's possible you may qualify for the Foreign Tax Credit.

• What does or doesn't qualify for the Foreign Tax Credit?
• Where do I enter the Foreign Tax Credit or Deduction?

The home sale exclusion will not apply to the overseas property.  As you indicated, any gain can offset the stock losses.

To enter your sale in TurboTax, follow these steps. Click this link for more information. Where do I enter Investment Sales?

1. Open or continue your return.
2. Navigate to the investment sales section:
   • TurboTax Online/Mobile: Go to investment sales. If using this application, make sure it is open
   • TurboTax Desktop: Search for investment sales and then select the Jump to link.
3. Answer Yes to the question Did you sell any of these investments in 2024? (or Okay! to Time to kickoff your investments!).
   • If you land on  the Investment sales summary or Your investments and savings screen, select Add More Sales or Add investments.

To enter your home sale and receive the exclusion follow these steps.

1. Open or continue your return.
   • TurboTax Online/Mobile or TurboTax Desktop - Search (upper right) > Type home sale > Click the Jump to... link
2. Continue to follow the prompts.

[richardR1]

if there is no real estate agent form supplied do i manually prepare one?

[AmyC]

No, just enter the information into the program under Investment Income. 

Sale of stocks, bonds, other. See Where do I enter the sale of a second home, an inherited home, or land on my  taxes? 

Since you are not filling out a rental house form, it is sale of a second home.

[richardR1]

wait so nothing is being issued so i prepare a 1099-B myself?

[Shannon B1]

No, you don't need to prepare Form 1099-B. It's for stock and bond investments, not for selling a second home. In TurboTax, you would choose "other" under  Investment sale.