How do I report the sale of rental property?

Forum|Forum|6 years ago
June 7, 2019
4 replies
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Sold what has been used as a rental property in 2016. It was not rented out in 2016 but had been for 14 years prior. It won't let me use it as sale of rental where I can add expenses and depreciation - which has been taken in prior years. If I put it in the sale of investment then it shows as a loss but given the depreciation taken it probably isn't correct. Any thoughts?

TurboTax Self Employed Online

seaescapee1218

Employee

Sale of Business Property Form

demigods87

what are expenses of sale

PatriciaV

Employee

Yes, the sale of real estate previously used as a Rental Property is reported as the Sale of Business Property. You will need to know the amount of depreciation that was taken during the period you reported this as a rental property. (TurboTax will not calculate this for you.)

The easiest way to find this section of TurboTax is to use the Search box at the top right side of the TurboTax header. Click on the magnifying glass, type in "sale of business property", hit Enter, and click on "jump to sale of business property" to go directly to beginning of this topic.

Or go to My Account >> Tools >> Topic Search. Type in "sale of business property", then click the topic in the list to go directly to the start of this section.

At the start of this section, choose "Sales of business or rental property that you haven't already reported" (see screenshot below - click to enlarge). Then follow the prompts to enter the sale, basis, and other info for your property. Note that you cannot report a loss on this type of sale.

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sderbydropAuthor

The property was sold at a loss due to a step up after my husband died in 2008. Not sure if I should even consider it in the return>

Anonymous_

Employee

This post has been deleted.

@andryvotty wrote:
If you sold the rental property for $500,000 or more, you will need to report the sale on Form 1099-S.

There is no magic number here with respect to the sale of investment or rental real estate. Further, the party responsible for closing the transaction is also responsible for filing the 1099-S (and that's usually not the transferor).

See https://www.irs.gov/instructions/i1099s#en_US_202201_publink1000280429

@andryvotty wrote:
If you sold the rental property for less than $500,000, you will need to complete Form 8949 and Schedule D to report the sale. Form 8949 is used to report the sale of capital assets, such as rental property...

Again, there is no magic number, but the sale of rental property (subject to depreciation recapture) is reported on Form 4797; real estate held for rental purposes is essentially business property.

@andryvotty wrote:
If you have taken depreciation on the rental property over the years, you may be subject to depreciation recapture when you sell the property.

With respect to rental real estate, the owner is subject to depreciation recapture whether or not depreciation deductions have been taken over the years (recapture is based on depreciation deductions "allowed or allowable").