Question

I sold my owner occupied rental in 2020. How do I enter this sale in the turbotax system? My portion is excluded from gains, but the rental is not.

Forum|Forum|5 years ago
February 15, 2021
1 reply
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Not sure how unique this situation is but I lived in my primary residence (B side) for the past 7 years. My house was a duplex and we always rented out up until 2 months before closing (A side). I need to pay depreciation recapture and capital gains taxes on the A side portion of the sale but my side portion of the sale is excluded. I know how to calculate the amounts, I just don't know how to enter it into this software. Should I enter the primary residence sale information in the income section and the rental portion in the rental section?

TurboTax Premier Online

ColeenD3

Yes. See this answer from Zbucklyo:

Treat this as two separate properties. On the rental side, you pay capital gains tax on the entire gain, including depreciation recapture. On the part that used to be a personal residence, you can exclude 250k/500k, but pay depreciation recapture from depreciation since it was converted to a rental.

Simplified example. You purchased the entire structure for 200k, and sell it for 600k, no capital improvements. Assuming a 50/50 split, you would have a gain of 200k plus depreciation recapture on the rental portion, and a 200k gain plus smaller depreciation recapture on the personal side. Applying the exclusion on this property eliminates the capital gain, but not depreciation recapture. You can't apply any if the "leftover" exclusion to the rental side.

S

suzanna_joyAuthor

There wouldn't be any depreciation recapture on my personal residence side. Depreciation only applies to the rental asset. I have the numbers, calculations and gain amounts, just didn't know if turbo tax needed them entered all under sale of main home or under both sections as the notes/instructions in the software are not clear and send you in circles.