How report sale of rental property, where enter 1099-s?

Forum|Forum|4 years ago
February 20, 2022
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I've spent at least an hour trying to figure this out without success, so thought I'd try here.

I did find one posting that tried to answer the question here: I sold my rental property. How do I report that? (intuit.com)

The instructions at that link state to check the "I sold or disposed of this property in 2021" box in order to accomplish the task. However if you click the "learn more" link next to that box the instructions state not to check the box if the disposition was to a related party which is the case for me (sold it to my daughter). So it's still a no go for me...

Also, another question to prove I'm a real novice and have been looking all over... It appears rental information can be entered in the "Investment Income" section, the "Rental Properties and Royalties" section, and the "Business Items (Sale of Business Property)" sections. How do I know which section I should be using?

Thank you in advance,

Rich

ColeenD3

Since it was a business property, enter it in Sales of Business Property. If you took a loss due to the related party sale, pay close attention to the instructions.

Special rules apply to sales to a related party and gifting of equity.

No loss deduction is allowed to a taxpayer when the transactions involve a related party or a gift of equity. This requires some math when entering the sale of business or rental property.

When entering either of these transactions into Sales of Business Property, you will have to make manual adjustments to the basis to prevent the loss from showing. Keep these figures on hand as back-up for this adjustment.

1) Wages and Income

2) Other Business Situations

3) Sale of Business Property

4) Other Property Sales

5) Select Sales of Business or Rental Property that you haven't already reported

6)Choose No to the question, "Do all of the following apply to the property you sold?".

7)Choose Yes to the following screen that asks, "Do any of the following descriptions apply to the items you sold?".

8)Select the type of property from the drop down box.

9)Enter the information for your sale.

Example: You purchased the property for $250,000. The FMV is now $300,000. You sold it to a related party or gifted equity with a sales price of $200,000. The program as it stands would show the loss. You must decrease the basis to equal the sales price in order to not show the loss.

The new owner's basis is still $200,000, regardless of how you entered your sale in the program.

zenmster

Employee

don't you have to enter the sale of the property and related expenses as part of the depreciation entry boxes too? I'm using desktop TT2021 for mac home & biz btw.

I did this based on a post in 2019 but it's scary since after I entered my realtor fees of $15000, my refund amt went DOWN...: O

https://ttlc.intuit.com/community/tax-credits-deductions/discussion/where-do-i-report-real-estate-agent-fees-for-the-sale-of-investment-property/00/670164

Carl11_2

Employee

For starters, forget about the 1099-S. That's informational only, and the amount reported to you on the 1099-S is only the proceeds you were paid at the closing. It usually does not include all of your gain that may be taxable. Note that there is nowhere to enter the 1099-S either, since the form is informational only.

Here's the general guidance.

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 2021". Select it. After you select the "I sold or otherwise disposed of this property in 2021" 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 if it's zero. Then you MUST work through the "Sale of Property/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 on some assets. Likewise, if you sold at a loss then you must show a loss on all assets, even if that loss is $1 on some assets.

Basically, when working through an asset you select the option for "I stopped using this asset in 2021" 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.

richardeberAuthor

Thank you for the quick response. The advice to forget about the 1099-s helps a lot as I've been fixated on entering it somewhere because I felt it must be a requirement. Sounds like I can ignore the text within the turbotax program since it specifically states not to check the "I sold or otherwise disposed..." box if the sale was to a related party (as originally noted). I'll trying doing that in the next few days because I'm at the point I'll try anything. I thought I tried it before and was still never asked about a sales price but I'll give it another shot. Thank you.

As an aside, I never lived in the house and don't have any other associated expenses/assets, just simply rented the place to my daughter and then sold it to her.

LeonardS

To report the sale of your rental property in TurboTax follow these steps:

With your return open in TurboTax, search for rentals and then select the Jump to link in the search result.
Answer Yes to the question Did you have any income from rentals or royalties?
When you get to What are you here to report? select Rental property and fill out the description, address, and owner.
When you hit Tell us about your situation this year check the Sold box along with any other boxes that may apply.
Continue following the onscreen prompts to enter info about your rental property. Eventually, you'll get to the Review your rental property info screen. You can report the sale in the Expenses/Assets (Depreciation) section, along with any other pertinent info (like income and expenses)