How do I report the sale of a rental property (house) on my income tax?

Question by Jim: How do I report the sale of a rental property (house) on my income tax?
Is there a special form for calculating the “adjusted basis” for the sale of a rental house? Is this something I can do on TurboTax, or should I get a tax person to do it for me. I have all the records from the time I purchased it to date and I don’t mind pouring over the Federal Tax Code, as I know will be necessary.

Best answer:

Answer by Redjr01
On the sale of rental property you need to deduct any amount depreciated from the initial cost basis. On the other side, any capital improvements you have done to the property needs to be added to the initial cost basis. No special form is needed and Turbo Tax may be able to walk you through it if you get the advanced version, but it’s not that complicated. This transaction is reported on Schedule D. So, once you figure your adjusted cost basis the rest should be easy.

Keep in mind the IRS has rules as to what is considered a capital improvement, so any tax guide will explain them clearly. You can get that info on the IRS site as well. Also, make sure you have the documentation to back up these improvements.

I hope this helps.

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How do I report the sale of a rental property (house) on my income tax?

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