Question

Rental Property Sold, setting adjusted cost basis

Forum|Forum|4 years ago
April 7, 2022
1 reply
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Sold rental property purchased 10+ years ago 90K, sale price 130K, Turbo Tax is showing 89K in capital gains (cumulative depreciation....)

Under Sales Information Turbo Tax asks for Sales Price and Sales Expenses (Business Portion Only). There is no breakdown like renovations, or taxes, legal fees ....

I don't qualify for any of the normal ways to avoid capital gains, i.e 1031, IRA, .....

Questions:

Is this where I can add items like costs incurred in the purchase, sale ... and big items like renovations?

The capital gains on the "gain" is near 32%, shouldn't this be much lower as it should be long term capital gains?

I had a lot of renovations before selling, concerned .... paper tail is spotty through the years ... is there some % value to stay under?

T

ThomasM125

Since it is a rental property, you should have added improvements as assets when they were made and depreciated them each year. You can add them to the basis of the property upon sale, but you will also have to include the depreciation that should have been taken when you calculate the gain or loss on sale.

You will pay tax at ordinary tax rates to the extent you took depreciation on the property. So, your tax on the gain may be more than what would be calculated using capital gain rates.

There is no generic percentage of repairs or improvements that I know of.

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