Schedule E - Vacation Rental Properties

Forum|Forum|1 year ago
March 26, 2025
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I had a vacation rental property sold in Aug 2024 and used a 1031 Exchange to purchase a different property in Sep 2024. The SAME management company managed BOTH units during the year. Asa such they only sent me ONE 1099-MISC form with totals that include BOTH properties. What should I do ??? Try to break out the 1099-MISC amounts ands "fake" Turbotax into thinking I have two separate 1099-MISC statements, one for each property ??? Thanks.

DianeW777

Yes, you can break out the 1099-MISC amounts into two. The choices are enter two 1099-MISCs or simply enter the correct income in the correct rental properties an keep the form in your file. The IRS knows the income is for rents and so likely no questions later on.

Section 1031 Like Kind Exchange Tax Information:

Depreciation Rules:

The basic concept of a 1031 exchange is that the basis of your Old Property rolls over to your New Property. In other words, if you sold your Old Property for $100,000, and bought your New Property for the same, your basis on the New Property would be the same. It makes sense then that your depreciation schedule would be exactly the same, and does not change! In other words, you continue your depreciation calculations as if you still own the Old Property (your acquisition date, cost, previous depreciation taken, and remaining un-depreciated basis remain the same).

Buy Up:

If you 'buy up' in your exchange (your New Property cost more than you sold your Old Property), the answer is easy – you treat the buy up part as you would a new addition to an existing property. In other words, you treat the amount of the buy-up the same as you would the cost of construction, for example, of a garage added to an existing house – the cost is the amount of the buy-up; the date you start depreciating it is the date you purchased the new property; and the depreciation method you use is the method most appropriate for that type of property in the year you bought the New Property (regardless of the method you used for the original house). If you think of it this way, then it's easy, even if your property is a large office building or a more complex purchase.

Boot:

Any property or money you might have received that is unlike property in the exchange would be immediately subject to capital gains tax.

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semjeitoAuthor

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DianeW777

Try the detailed steps listed in your other question and placed here for your convenience. This should provide the correct resolution. Make sure to select 'Special Handling' for the assets given up assuming you are creating a new asset for the new property. Then follow the steps to enter your new asset.

Allocating the income and expense is the appropriate action and accurate entries from the one 1099-MISC you received.

When you have your TurboTax return open you can use the following steps to update the original assets for the exchange.

First use the Search (upper right) > Type rentals > Press enter > Click on the Jump to... link
Or Wages & Income > Rental Properties and Royalties > Update > Continue to Rental and Royalty Summary > Edit the property
Scroll to Assets/Depreciation > Click Update > Select 'Edit' next to each asset
Edit beside each asset > Continue to the Tell Us About This Rental Asset
Select the checkbox beside 'This item was sold, retired, .... traded in ....etc. > enter the date it was traded (sold/retired)
1. You can choose not to select this and just change the name of the assets given up in the trade to identify them with the new property. The depreciation for the year will not change on these assets.
Answer the question about whether it was 100% business > Leave the original date it was placed in service (may be purchase date or later depending on your circumstances)
Continue to the screen 'Confirm Your Prior Depreciation'
- The amount displayed is only for prior years and does not include the current year.
- Continue until you see the current year amount displayed and make a note to add the two amounts together for the Section 1031 like kind exchange.
- This completes the asset portion of the trade.
Answer 'Yes' to Special Handling.

Next you will complete the like kind exchange, Form 8824 (Section 1031 exchange):

Use the Search (upper right) > Type like kind > Press enter > Click on the Jump to... link
Select the checkbox beside 'Any additional like-kind exchanges (section 1031)' > Continue
Complete the information for the 'Real estate given up' and 'Like-Kind Property Given Up' > Continue
Name the event > Continue > Complete the information for the 'Like-kind property received'
If you did not give unlike property in the exchange click 'No' and continue past these screens, if 'Yes' answer the questions.
Enter any exchange expenses (sales expenses) > Continue to see your deferred gain.

If you marked the original assets as sold, traded, etc (see 6. above) then go back to your rental activity and then enter new assets with the exact same information as the property given up with a new name, but with the same date placed in service as the old property, for all assets that are part of the exchange.

Depreciation stays the same on the received property and a new asset is created for any buy up in the exchange.

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jbnielsen

The one should give all necessary information. You are reporting a sale and purchase, which are treated as one transaction under 1031. If you need information not provided on the form, contact the management company.