How does one account for a roof asset in the sale of a rental property

Forum|Forum|3 years ago
January 8, 2023
2 replies
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I can place the sale for the house. how do I account for the roof placed in service 5 years before the sale that has been being separately depreciated?

TurboTax Live Self Employed

Anonymous_

Employee

I will page @Critter-3 for more input but you will have to allocate the selling price between the roof and the house in some fashion in TurboTax.

Critter-3

ALL of the assets should be listed for depreciation and ALL of them must be sold off. Prorate the sales price and the cost of sale and enter them as needed per asset ...

See this TurboTax support FAQ for the sale of a rental property - https://ttlc.intuit.com/turbotax-support/en-us/help-article/real-property/sold-rental-property-repor...

Ok ... a simple example of ratios ... if you have more assets than the example then you will have more lines. Remember if you divide a big number into a littler number you get a % ... thus 5000/100,000 = 5%

original cost basis ratios Sales price cost of sale

home 80000 80% 160,000 8,000

land 15000 15% 30,000 1,500

roof 5000 5% 10,000 500

totals 100,000 100% 200,000 10,000

All you need to enter into the program is the % of sales price & % of cost of sale for each asset being sold and you will have to do the math yourself as the program will not do it for you if you have more than one asset (the land & building are considered 2 assets) .

And if you have NOT been taking depreciation as required then RUN to a local tax pro when you file this return to get this error fixed correctly so you do not pay more taxes than you are required to do ... the form 3115 you need is not supported in the TT program and it is NOT a DIY project.

Carl11_2

Employee

When allocating your sales price across multiple assets, it's important you do it correctly. Basically, if you sold the property at a gain, then you must show a gain on all assets. Doesn't matter if the gain is $50K on one asset and $1 on another asset. A gain, is a gain, is a gain, is a.....

Likewise, if sold at a loss, then you must show a loss on all assets.

If you don't do this, then recaptured depreciation will be taxed incorrectly, and this is "NOT" an error the program will catch either.