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sale of rental

Level 1

Do I enter the cost of capital improvements made to a rental property (while getting it ready to sell) as an asset, but show date placed in service the same day as the property sold, with sell price 0. This giving a short term capital loss, to offset long term gain of rental?

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3 Replies 3
Level 11
Level 11

If you are still renting while getting it ready for sale, then you would capitalize the improvements, and list the entire improvement as 27.5 property. date in service is when you complete improvements. If you have made it unavailable while improving it the capital improvements are added to your cost basis

Level 1

The tenants move out. Improvements were being done. Decided to just completely remodel entire house and sell.  So was never put up for rent. Where and how do I adjust the basis, that I have been depreciating all along? I can't find where to show it, which is why I was just going to add as capital improvement on depreciation asset sheet and show placed into service and sold same day. no depreciation would be taken..

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Level 5

It does not get included when adjusting the depreciation for the sale. It increases the basis as cost of sale improvements as an adjustment on the actual sale form...(not the Sch E depreciation form).