I bought a property with a friend. We renovated and sold it 9 months later with profit. It was never rented. How to declare the transaction?

[TurboTaxSusan]

You can report this as capital gains.

To do this in TurboTax Online:

1. Select Find from the TurboTax menu
2. In the Find window, enter capital gains
3. Select Capital Gains and Capital Gains Deduction Profile from the results, then select Go

[klaxnow]

Hello TurboTaxSusan,

Thank you for your reply and instructions, it's much appreciated. 

I was confused if this transaction can be declared for capital gains or it has to be declared as a business activity? To clarify, we bought the property in December 2021 and after renovating it, we sold it in August 2022. It was the first time we had this type of transaction. In the past, we renovated property and rented it out. Our main income is from rental properties but this one, in the end, we decided to sell.

I have followed your instructions to declare it as capital gains and selected capital gains profile for myself only (there's an option for my spouse but she wasn't an owner at any stage). However there is no option to add my friend, who was a co-owner of the property...

In Capital Gains, as well, there's no option to split the ownership of the property. Do I enter all of the values in halves? (Proceeds of disposition, adjusted cost base and outlays and expenses - all in 50% value?).

Finally, can I enter all costs of renovation plus legel fees in outlays and expenses? 

Best regards, 

klaxnow

[TurboTaxSusan]

If you are or are planning to buy, renovate and sell homes on a regular basis, then yes, it would be considered business income. 

If you are going to enter the sale as capital gains, then since your partner is not a spouse, you would have to divide the amounts yourself, then enter them into TurboTax.

Outlays and expenses are the amounts that you incurred to sell a capital property. These types of expenses include fixing-up expenses, finders' fees, commissions, brokers' fees, surveyors' fees, legal fees, transfer taxes, and advertising costs.

Costs to improve or add to the property would go into the Adjusted cost base. Adjusted cost base would also include the cost of a property plus any expenses to acquire it, such as commissions and legal fees.