How do I account for the sale of a personal home that was used as rental income in the past?

Start working through Rental & Royalty Income (SCH E). Steps to Enter

For Turbotax Home & Business, select the business tab, then “I will choose what to work on”, then elect to start/update Rental Properties & Royalties

For all other versions of TurboTax under the Wages & Income tab scroll down and elect to start/update Rentals & Royalites.

Now work through this rental property making the proper selections and entering required information as necessary. The major screens to indicate sale are below.

On the screen titled “Do Any Of These Situations Apply To This Property”, select the option for “I sold or otherwise disposed of this property in 2016”, then Continue. (see screenshot 1 to see what the screen looks like)

Was This Property Rented for All of 2016? No

Further on in the Depreciation Section you will see

Tell Us About This Rental Asset (SS2)

SALE OF HOME EXCLUSION

If you sold your personal primary residence and you lived in and owned the home for at least two years in the five year period on the date of sale, you do not have to report the sale if your gains are less than the exclusion amounts of $250,000 if filing Single or $500,000 if filing Married Filing Jointly (and both lived in and owned the home for two years). 

To qualify for the exclusion, the requirements are:

 1 - Ownership Test:

 You must have owned the home for at least 730 days (2 years) of the last 730 days (2 years) prior to the closing date on the HUD-1 statement you received at the closing when you sold the property.

2 – Use Test:

                You must have lived in the home as your primary home (not 2nd home or vacation home) for at least 730 days of the last 1826 days prior to the closing date on the HUD-1 closing statement you received at the closing when you sold it. The time it was your primary home does not have to be concurrent.

3 - During the 2-year period ending on the date of the sale, you did not exclude gain from your taxable income from the sale of another home.

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