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How do I enter then information for a sale of a rental property? It doesn't say how to enter it in the Sale of Property/Depreciation section.

Forum|Forum|6 years ago
June 2, 2020
2 replies
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First time using Turbo Tax. It says to enter sales information in the Property Assets Section. I don't know how that needs to be done.

TurboTax Premier Online

Best answer by Critter

Each asset listed in the asset section is sold off ... indicate it was sold and the program will walk you thru the sale.

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CritterAnswer

Employee

Each asset listed in the asset section is sold off ... indicate it was sold and the program will walk you thru the sale.

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Carl11_2

Employee

Reporting the Sale of Rental Property

If you qualify for the "lived in 2 of last 5 years" capital gains exclusion, then when prompted you WILL indicate that this sale DOES INCLUDE the sale of your main home. For AD MIL personnel who don't qualify because of PCS orders, select this option anyway, because you "MIGHT" qualify for at last a partial exclusion.

Start working through Rental & Royalty Income (SCH E) "AS IF" you did not sell the property. One of the screens near the start will have a selection on it for "I sold or otherwise disposed of this property in 2019". Select it. After you select the "I sold or otherwise disposed of this property in 2019" you continue working it through "as if" you still own it. When you come to the summary screen you will enter all of your rental income and expenses, even it it's zero. Then you MUST work through the "Sale of Assets/Depreciation" section. You must work through each individual asset one at a time to report its disposition (in your case, all your rental assets were sold).

Understand that if more than the property itself is listed in your assets list, then you need to allocate your sales price across all of your assets. You will only allocate the structure sales price; you will NOT allocate the land sales price, since the land is not a depreciable asset. Then if you sold this rental at a gain, you must show a gain on all assets, even if that gain is $1. Likewise, if you sold at a loss then you must show a loss on all assets, even if that loss is $1

Basically, when working through an asset you select the option for "I stopped using this asset in 2019" and go from there. Note that you MUST do this for EACH AND EVERY asset listed.

When you finish working through everything listed in the assets section, if you ever at any time you owned this rental you claimed vehicle expenses, then you must also work through the vehicle section and show the disposition of the vehicle. Most likely, your vehicle disposition will be "removed for personal use", as I seriously doubt you sold your vehicle as a part of this rental sale.

T

Taxing1111

@Carl11_2 Thanks for the thorough explanation. I have a loss on the sale of the rental property and in your reply you indicate the loss needs to be spread across each asset. My question is: How do I allocate the loss to each asset in the depreciation schedule when I only have the total sale price for the property and not broken out by asset. I can estimate what percent is allocated to the land vs improvements by the breakout used on the county property tax forms, but not sure how I can spread out the non-land amount across all the other assets. Like what I would put as the sales price for each asset? Thank you so much!!

Carl11_2

Employee

It's perfectly possible that after depreciation recapture, what you call a loss, could in fact be a gain, meaning that at least some and possibly all of the recaptured depreciation would be taxable.

In your case, I would suggest you convert the property and each individual asset to personal use with a conversion date being the closing date of the sale. As you work through each asset add up the depreciation amounts (prior years and current year). Then report the sale in the "Sale of Business Property" section. You'll be asked for sales price, cost basis, and the total of all depreciation taken. This will allow the program to "correctly" figure if you actually have a gain or a loss to deal with.