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Selling rental property with a partner

Forum|Forum|3 years ago
April 12, 2023
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We have a rental property that we sold in June of 2022. We bought it in 2007 but added a new roof in 2019. We bought some other appliances that we have been depreciating along with the roof and the building portion of the property. There is still some undepreciated amounts in those assets.

Where in TurboTax Home and Business do we let the program know that those assets should be added to our cost basis of the property sold?

Also, we were in a partnership where each one of us owned 50%. Do we take the sales price (of the building) and enter half of that as well as the closing costs? By the way, our 1099-S shows the full amount of the sale.

The program asks what percent of the property I owned, but it states that it will only cut the expenses in half. What else do I have to manually divide by two before entering?

Best answer by PatriciaV

Yes, allocate the sales proceeds and closing costs according to the ownership of the property. You don't need Form 1099-S to report a rental sale.

When you add the rental asset(s) to TurboTax under Rental Properties >> Assets/Depreciation, enter only the portion of the basis that belongs to you. While TurboTax can allocate expenses based on the ownership percentage, you need to calculate everything else that is split. Enter each asset separately so you can report the accumulated depreciation accurately.

Once you have entered everything for the rental property, return to the Property Profile and check the box for "I sold this property." Now the asset section will be listed as "Sale of Assets/Depreciation." You will need to allocate the sales proceeds to all assets, not just the main residence. You can either sell each asset for its book value (purchase price less accumulated depreciation) or calculate the percentage of book value for each asset and apply that to the sales price. Critter-3 provides an excellent example here: How to Allocate Gains to Various Assets

This is a complex and tedious process, and you may consider upgrading to TurboTax Live. This online service provides step-by-step guidance from a tax expert whenever you need assistance, either over the phone or by screensharing.

Additional Information:

M

Mike9241

those appliances and roofing should have been added and depreciated. if not you need form 3115 to correct the underreporting

PatriciaVAnswer

Employee

Yes, allocate the sales proceeds and closing costs according to the ownership of the property. You don't need Form 1099-S to report a rental sale.

When you add the rental asset(s) to TurboTax under Rental Properties >> Assets/Depreciation, enter only the portion of the basis that belongs to you. While TurboTax can allocate expenses based on the ownership percentage, you need to calculate everything else that is split. Enter each asset separately so you can report the accumulated depreciation accurately.

Once you have entered everything for the rental property, return to the Property Profile and check the box for "I sold this property." Now the asset section will be listed as "Sale of Assets/Depreciation." You will need to allocate the sales proceeds to all assets, not just the main residence. You can either sell each asset for its book value (purchase price less accumulated depreciation) or calculate the percentage of book value for each asset and apply that to the sales price. Critter-3 provides an excellent example here: How to Allocate Gains to Various Assets

This is a complex and tedious process, and you may consider upgrading to TurboTax Live. This online service provides step-by-step guidance from a tax expert whenever you need assistance, either over the phone or by screensharing.

Additional Information:

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