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Rental house sold. Roof not fully depreciated. Should we add the rest of roof cost to sales basis?

Forum|Forum|7 years ago
June 1, 2019
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TurboTax Premier Windows

Best answer by MichaelL1

Whenever you sell a rental you need to first sit down and allocate the sales price.

Look at what was depreciated and what is on the depreciation schedule.

Then you will allocate in your case to:

The building

the roof

the land

whatever else has value that was depreciated.

The total sales price must be allocated out to these items to correctly report the sale.

MichaelL1Answer

Employee

Whenever you sell a rental you need to first sit down and allocate the sales price.

Look at what was depreciated and what is on the depreciation schedule.

Then you will allocate in your case to:

The building

the roof

the land

whatever else has value that was depreciated.

The total sales price must be allocated out to these items to correctly report the sale.

Employee

No. You add the total cost of the roof to your cost basis. (Or the other answer suggests, enter the sale of each asset separately). Then you separately enter the depreciation taken. You do the same for the main building (and any other asset). In the case of a fully depreciated asset, you will effectively enter the entire cost as depreciation claimed.

Depreciation "recapture" is taxed separately (at different tax rates) from the rest of the capital gain.