I sold my vacant rental property in 2/2021. I made capital improvements in 1/2021. Where do I add their cost? Do I add to the cost basis transferred from 2020 return?

Forum|Forum|4 years ago
April 13, 2022
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The rental property was listed for sale in January 2021 and was not actively listed for rental. I installed a new heating system during this time. Where do I add this capital improvement to my cost basis. The cost basis figure transferred from my 2020 return did not include this improvement as it was made in 1/2021. Should I manually change the cost basis? The sale closed in Feb 2021.

TurboTax Self Employed Online

HelenC12

No, don't add the January capital improvements to your cost basis. Enter each of the capital improvements as an asset. For the Date purchased or acquired, enter the sale date (February 2021).

Please see my previous post on how to enter the sale of a rental. Click here.

Some items to remember as you enter your rental sale:

You have to indicate you sold the rental property in both the Property Profile section and the Assets/Depreciation section of the program. You will be prompted to enter sales information during the interview in the Assets/Depreciation section of TurboTax.
Closing costs are considered expense of sale and this reduces the gain or increases a loss on the sale. TurboTax will ask you about the expense of sale. Examples are commissions, transfer tax, recording fees, etc.

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Kollistim1Author

This does not help me. I know how to enter the sales information for the rental. However, if I add an asset (heating system) there are a series of questions that follow in the screens. It asks me about the sales price of the asset; date it was sold, The sales price and the expenses. I don't know what to put in. Is the sales price of the asset (the heating system) the same price I paid for it? It also asks me to allocate my expenses. Not sure what I do here.

PatriciaV

Employee

You have a choice to allocate the sales proceeds between the rental property and the new HVAC or to report zero sales proceeds for the HVAC. Either way, report only the actual total proceeds you received. Selling expenses would be handled the same way.

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