Question

Rental property sale gain calculation incorrect

Forum|Forum|5 years ago
February 11, 2021
2 replies
0 views

I have a pretty simple single family rental home that I bought in 2011 and sold in 2020; not ever my primary residence. I'm using TT Home & Business and always have used this version to calculate rental income, expenditures, and depreciation. However, TT says my gains for both the asset and land sale combined are far higher than what I actually made on the sale.

Step 1: I edited the Asset under the section "Your Property Assets"

Step 2: I reviewed the cost basis and original purchase dates

Step 3: I indicated I stopped using this asset in 2020

Step 4: I entered in the sale dates

Step 5: I stated "No" to "Special Handling Required" (Not sure what this really means)

Step 6: I stated "No" to "Was this asset included in the sale of my main home"

Step 7: I broke down the land vs asset sale prices and added the sales expenses as per the seller statement

Step 8: I stated "No" to "Did I use this rental property for personal residence"

Step 9: TT gives me the results of the gains, which if combined both the residential gain and land gain it exceeds what I actually received. I can test it by add my cost basis with the gains TT states and it's over by $100k. AND this is causing my taxes owed to be VERY high.

Thoughts, suggestions?

TurboTax Home & Biz Windows

A

Anonymous_

Employee

Have you reviewed the transaction on the worksheet in Forms Mode?

If there is an input (or program) error, you should be able to track it down.

Carl11_2

Employee

Most likely, you forgot to take into account the depreciation you are required to recapture and pay taxes on in the year of the sale. Add the depreciation taken on the asset, to your sales price of that specific asset, and my bet is the math works out exactly as it should.

Note that if you did not take depreciation on the asset, you are still required to recapture the depreciation you "should" have taken on that asset.