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Add New Investment Property to an Amended Return (Purchased for Renovation/Sell)

Forum|Forum|2 years ago
February 26, 2024
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Greetings TurboTax Experts, please advice.

I THINK I need to amend last years (2022) return to add Investment property purchased in October 2022 but was unintentionally left out of paperwork used for preparing taxes. The property is intended as a complete renovation followed by resell at a future date (hopefully 2024). There was no interest paid on the personal loan that was extended for the purchase of the property during 2022. Labor & Materials were expended (~$40,000) during 2022. I assume an amended return is required in order to establish, at a minimum, the original Purchase Date and/or provide loan details. The loan was later refinanced in 2023.

From what I gather reading posts here, any interest paid during 2023 would be recorded under Schedule A as well as any Property taxes paid. And any expenses incurred for the physical renovations (Labor/Materials) are only needed/used once the property is sold and the taxable profit determined.

Where within TurboTax is the property recorded and how?

Thanks in advance, regards. - jwgnle

TurboTax Business Windows

Best answer by DianeW777

If the property purchased is simply and investment property and after renovations you plan to sell it, there is nothing to report on the tax return in the year of purchase or any year until it is actually sold. If you sell the property, then you will use the original cost, plus purchase expenses, plus renovations/capital improvements to arrive at your final cost basis to use against the selling price and selling expenses.

If you need to amend to include the mortgage interest and property taxes you are allowed to include this with your itemized deductions.

Check your 2022 return to see if you used the maximum $10,000 for state and local taxes, if so the property taxes will not help you.

Mortgage Interest is allowed for your first and second home within limits.

See Publication 936 to figure your deduction if you have loans taken out after October 13, 1987, that exceed $750,000 ($375,000 if you are married filing separately). Limit when loans exceed the fair market value of the home. If the total amount of all mortgages is more than the fair market value of the home, see Pub. 936 to figure your deduction.

Be sure to read all the instructions carefully, before you begin, so that TurboTax knows the original numbers and the changed numbers for your amendment.

If you already filed your returns and you need to amend or change them you can use the links below to get started:

How do I amend a prior year return?

D

DianeW777Answer

If the property purchased is simply and investment property and after renovations you plan to sell it, there is nothing to report on the tax return in the year of purchase or any year until it is actually sold. If you sell the property, then you will use the original cost, plus purchase expenses, plus renovations/capital improvements to arrive at your final cost basis to use against the selling price and selling expenses.

If you need to amend to include the mortgage interest and property taxes you are allowed to include this with your itemized deductions.

Check your 2022 return to see if you used the maximum $10,000 for state and local taxes, if so the property taxes will not help you.

Mortgage Interest is allowed for your first and second home within limits.

See Publication 936 to figure your deduction if you have loans taken out after October 13, 1987, that exceed $750,000 ($375,000 if you are married filing separately). Limit when loans exceed the fair market value of the home. If the total amount of all mortgages is more than the fair market value of the home, see Pub. 936 to figure your deduction.

Be sure to read all the instructions carefully, before you begin, so that TurboTax knows the original numbers and the changed numbers for your amendment.

If you already filed your returns and you need to amend or change them you can use the links below to get started:

How do I amend a prior year return?

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J

jwgnleAuthor

Thank you Diane. That's what I was hoping for. I still need/want to do an amended return to add a Vacation Home Time Share property which has a mortgage attached to it. I understand this is an allowed deduction (mortgage interest paid) as long as there is an associated mortgage and the address of the property appears on the 1098. All that said, reference my other question/issue related to starting an amended return and the $484 refund it kicks off with. IF I do the amended return, I'm gonna need a reason for the $484. $484 is great and all, but I assume the IRS is going to want to know what it relates to. 🙂

Thanks again for your help. - jwgnle