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May 14, 2021
Question

I sold my 2nd home where I stayed 2yrs out of 5yrs. This was rental prop until I sold it on 2020. The selling detail will go under "Home Sale" or "Rental Asset" sale?

  • May 14, 2021
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1 reply

May 14, 2021

only your primary residence qualifies for the home sale exclusion.  so you'll need to report it as sale of rental property.

 

May 14, 2021

It was my primary residence from 2014 to 2019, then I rented it until I sold in 2020. If I I am qualified for 2 out of 5 yrs. The sale will still go under the rental asset?

 

There is a similar post here. https://ttlc.intuit.com/community/investments-and-rental-properties/discussion/never-[product key removed]ing-in-the-pro[product key removed]e/01/701854/highlight/true

 

Thanks

Carl11_2
Employee
May 14, 2021

Report your sale in the rental property section. Understand that the depreciation you are required to recapture by law is "NOT" exempted from taxation. You will pay taxes on the recaptured depreciation no matter what. Recaptured depreciation is taxed anywhere from 0% up to a maximum of 25%, depending on your AGI.

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  2020". Select it. After you select the "I sold or otherwise disposed of this property in 2020" 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 2020" 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.