Reporting sale or rental property

[fadius]

Hello,

My wife, a US/Canada dual-citizen residing in Canada sold a rental property located in Florida in 2023.
The unit was completely renovated immediately before being sold.

couple of questions:

1- What is the correct way for handling the renovation cost prior to selling? Are they added as a capital expense or considered a expense as part of the disposition of the property or something else?

2- We don't expect the US tax returns to be filed until mid/late April. Given that she will owe money to the IRS on the capital gains, should she be making a payment in advance (I believe any taxes owed should be paid by end of march or else have to pay interest?) What is the best way to go about this?

Thank you

[nelsona]

1. The expenses are added to the cost basis.

2. Not a bad idea. The interest can be calculated back to the date of sale, but no harm paying some now.

[fadius]

thank you @nelsona

what's a good approximation on tax owed? would 15% of capital gains be reasonable (would prefer to pay a little less than pay too much and wait/hope for a refund)?