When you sell rental real estate, besides the original cost of the property itself, how do you handle other assets that increased the cost basis of the property sold?

Forum|Forum|5 years ago
March 25, 2021
2 replies
27 views

Major re-modeling and added furnace increased the value of the property and were separately depreciated. Should these assets be shown as dispositions? I need to add them to the adjusted basis of the asset that was sold.

ProSeries Professional

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Best answer by FREDW21901

If the assets were included in the sales price of the property, then show the full sales price as the sales price on the disposition line of the main property asset and show the improvements (other assets) as disposed for -0- . Only the depreciation of those improvements will then be added to the gross profit on the sale.

If any depreciated assets were sold separately from the real property, then their sales price should be shown on the disposition amount of the asset depreciation worksheet.

PATAX

Level 12

... in my opinion....All rental real estate fixed assets as well as capitalized improvements should be on the depreciation schedule along with the original purchase price of the residential real estate... You allocate the sales price,as well as the selling expenses, to each of the assets on the depreciation schedule... Just my opinion...

FREDW21901Answer

Level 3

If the assets were included in the sales price of the property, then show the full sales price as the sales price on the disposition line of the main property asset and show the improvements (other assets) as disposed for -0- . Only the depreciation of those improvements will then be added to the gross profit on the sale.

If any depreciated assets were sold separately from the real property, then their sales price should be shown on the disposition amount of the asset depreciation worksheet.

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