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April 7, 2024
Question

rented a house that was my main home for 25 years rented it for 12 years 7 months and sold it. what can i deduct from the sale price and where do i deduct it?

  • April 7, 2024
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I rented a house that was my main home for 25 years rented it for 12 years 7 months and sold it. what can i deduct from the sale price and where do i deduct it?

    1 reply

    April 14, 2024

    It depends on whether the rental is in your tax return now.  Based on your comments and question my answer will assume the assets are in your 2023 tax return.

     

    The IRS requires that the selling price be proportionately prorated to arrive at a selling price for each 'piece' of a rental property since many assets can be placed in service at different times, such as your roof.

     

    Yes, TurboTax is fully capable of reporting the sale of a rental property.  Here are some tips that may be useful.

     

    Use the original cost of each asset listed on depreciation, add those together then divide each one by the combined total to find the percentage of the cost for each asset.  Use that percentage times the sales price and sales expenses to find the selling price/sales expenses for each asset. (Choices would also be fair market value on the date of the sale or adjusted basis on the date of the sale, which is cost less depreciation.)

     

    Example:  Original Cost (of each asset on your depreciation schedule)

    $10,000 Land                = 13.33% 

    $50,000 House              = 66.67%

    $15,000 Improvements  = 20%

    $75,000 Total                 = 100%

     

    Multiply each percentage times the sales price/sales expenses to arrive at each individual sales price/sales expense.

     

    You need to dispose of the property by telling TurboTax how and when it was disposed of.  Follow the instructions below.

    1. Click on Wages & Expenses
    2. Scroll to Rental properties and royalties, click Edit/Add or Start/Revisit
    3. Do you want to review your rental?, click Yes
    4. Under Rent and Royalty Summary, click Edit
    5. Click Update to the right of Assets/Depreciation.
    6. Do you want to go directly to your asset summary?, click Yes and Continue
    7. Click Edit to the right of each asset to be disposed of/sold
    8. Go through several screens until you get to Tell Us More About This Rental Asset
    9. Click on This item was sold…….   And continue to answer the questions

    You might also review information here.

     

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