HELP - Sold my vacation rental and stuck on "Special Handling Required

Forum|Forum|4 years ago
April 16, 2022
1 reply
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I sold my rental home and I am trying to record the sale. I have owned it for 5 years and have had personal use at different levels for each of the 5 years. I know that I enter the sales price in the property assets section. I entered yes to the question "Did you stop using this asset in 2021" and then entered the dates acquired/disposed. Where I am confused is the next section "special handling required". It says to select yes if any of the conditions describes my situation: the business use percentage of this asset varied during the years you owned the asset. I believe that is a yes for me because our personal use varied from 15 - 30% over the years we used it. However if I enter yes here, it just moves on to the next asset and doesn't allow me to enter my sales information. I would appreciate any advice on this, thank you.

Mike9241

the issue is that Turbotax can't handle various percent of business vs personal use over the years.

depreciation must be recaptured, but perhaps Turbotax doesn't know how much was taken in each year. even though a rental at times, any gain above the depreciation recapture might be eligible for the home sale exclusion if used and owned any 2 years out of 5 years before the sale. however, a special rule applies if first rented then converted to personal residence.

what I saying is that perhaps Turbotax can't handle your situation.

stephentnewtonAuthor

Thank you. I have used Turbo Tax for all years that I have owned and rented the property so I have all of the information for depreciation recapture. This property was always used as a vacation rental but we have also used it ourselves a portion of each year. So each year, I have reported my personal use and which has reduced the amount of expenses allocated against the rental income. My understanding is that I need to segregate the portion of my sales price and selling costs now between business and personal use. If I answer no to the special handling requirement, I am able to enter it, I just wasn't sure which personal use percentage to use. But then my question is, where does the gain related to the personal usage go? I very much appreciate the help.

PatriciaV

Employee

Use your historical records to calculate the total personal use days as a percentage of total days available for rent.

The long-term gain or loss from the sale will be reported on Schedule D for both portions of the sale. However, the percentage allocated to the rental portion will determine depreciation recapture if the property is not fully depreciated.

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