rental property

Forum|Forum|3 years ago
March 2, 2023
1 reply
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I did a major remodeling/update to my rental property (rented for 4 months only) and sold it in the same year. How should I treat the remodeling expense? I am a bit confused as to whether this is expense of selling the property or should I add it to the base of the house? Thanks.

Best answer by JulieS

No, it is not an expense of selling the property. Sales expenses are typically just closing costs, commission, title search, etc.

If you did the remodeling while you were still renting the property, you should enter it as another asset for your rental, and show that it sold along with the house.

If you remodeled after your renters moved out, you should add the costs to the basis of the property.

JulieSAnswer

No, it is not an expense of selling the property. Sales expenses are typically just closing costs, commission, title search, etc.

If you did the remodeling while you were still renting the property, you should enter it as another asset for your rental, and show that it sold along with the house.

If you remodeled after your renters moved out, you should add the costs to the basis of the property.

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evdohdrAuthor

I was going through the Turbotax interview, maybe I missed it, somehow I didn't get to where I can enter the cost base?

GeorgeM777

You will be prompted to enter your cost basis for the rental property you sold in 2022 when you see the screen Do Any of These Situations Apply to This Property. To find this screen, from your Federal Taxes tab, select Wages & Income, and scroll down the screen to Rental Properties & Royalties (In TurboTax online the process is similar). Then select Start/Update and enter your information.

When you get to the screen, Do Any of These Situations Apply to This Property, select I sold or disposed of this property in 2022, and you will see a drop-down info panel indicating that additional information, such as depreciation, will be entered later. Continue to work through the application, and when you are done you should see a Review/Summary screen. Here you can scroll down to Sale of Property/Depreciation and enter your information about the sale of the rental property including basis information for the various rental property assets.

@evdohdr

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