I sold a property that was rented. Can I now change the cost basis to account for landscaping (depreciation will not impacted as its part of land) done prior to renting?

Forum|Forum|1 year ago
January 19, 2025
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TurboTax is automatically picking up the cost from the 2023 return. However, the cost does not include the landscaping cost done prior to renting. I never provided the landscaping cost when I started renting the property in 2014 as it does not come into play when calculating the depreciation (as landscaping is considered to be a part of the land). So when I report the sale in 2024, I just want to update the "cost" so that capital gains is correctly calculated. There will be no impact to depreciation because of this. Can I just updated the "cost" and "cost of land" in the TurboTax "Property Assets" section on the 2024 tax return? Thanks.

MAK70

Yes, you can add the landscaping to the basis. However, you will add this to the Cost in the Sale of Business Property section (see below). If you add it in to the Cost/Land Cost in the Rental Income section, it will make the adjustment on the Form 4562.

babypanthersAuthor

Thank you so much. Since I have already entered the sale in the "Rental Properties and Royalties" section, where do I enter the sale in the "Business Property Section"? Currently, I have not selected anything in the Business Property Section.

MAK70

It will be under Other Business Situations. When you are in the Rental Properties and Royalties (Sch E), they do ask if you sold the property, so it may come up in the interview; but if it does not, look for the section as below. @babypanthers