Question

Proper way to enter the sale of a rental property that used to be my primary residence

Forum|Forum|4 years ago
April 7, 2022
1 reply
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Hi All,

I purchased a house in 2008 and lived in it until mid-2019. I then rented it out from December 2019 until March 2021. After the tenants moved out. I spent a month fixing it up (paint, new carpet, new water heater, other repairs) and sold it in May 2021. I qualify for the capital gain exclusion. I received a form 1099-S from the sale.

What's the best to enter this transaction? Since the was not rented out after March 2021 and no longer used for business purposes, do I need to convert it back a personal residence and list it under Sale of a Home? Do I list the sale under Rental Properties and Royalties?

Appreciate any guidance you can provide.

ColeenD3

Enter the sale in the Rental section to include the income and expenses for the time you rented it. There is a place to indicate the period of time it was your main home.

Full steps for entering rental property:

The first entry for the sale is found during the set-up of the property: Tell us about your situation this year/Click Sold or disposed of property

Next, the asset section of expenses will already be checked:

*Assets

*Sold rental property

Includes info on the property you sold or disposed of. Since we know this applies to you, we've already selected it.

After you click on Asset, you will be asked about the purchase: Tell Us About This Rental Asset
In the screen Tell Us More About This Rental Asset, you will indicate the sale the date of the sale and the date you began using it for business. You can see the screenshot in a previous answer.
Next: Confirm Your Prior Depreciation
Next: Special Handling Required?
Next Home Sale?
Next: Sales Information. This is where you will be asked about the sales price.

R

revorgpAuthor

Thank you for you reply.

TurboTax calculates that my business percentage for the asset is 6%. Can you confirm that for the Sales Price and Sales Expenses, I should enter 6% of the Sales Price and Expenses respectfully (if sales price was $100, I would enter $6)?

Another follow-up question - for the work that I completed (new carpet, etc.) after the tenants moved out - do I add the cost of that work into the cost basis (purchase price) of the home?

ColeenD3

I don't understand the part about 6%. When you do repairs in conjunction with an improvement, it all counts as an improvement. The entire improvement is added to the basis (purchase price).

When you break out the home portion for the exclusion, it will calculate any personal gain on the sale. You will also have to recapture any depreciation ou took.