Question

Sale of a rental property

Forum|Forum|6 years ago
March 25, 2020
1 reply
0 views

I sold a rental property that I held for about 5 years. All the tax filings used Turbo Tax for income, expenses and depreciation each year. Several questions.

1. There was no rental income this year. When we finally got the tenant out we have significant expenses to clean and repair the unit. Should all these expenses be deducted as "expenses" or taken against the sale of the property.

2. Similarly, are the costs associated with the sale - commissions, closing fees, et al taken against the sale proceeds?

3. Lastly, since I used TT each year is the prior years depreciation automatically calculated?

I

Irene2805

On the sale of your rental property:

The expenses to fix up the property are normally added to the basis of the property, when you are calculating the capital gain on the sale.
Closing costs, both on the purchase of the property and when it is sold, are also added to the basis of the property.
Yes - TurboTax has tracked the depreciation taken and will automatically calculate the total.

Since the property was a rental and you have prior depreciation, enter the property sale in the Rental Property section. You will have to apportion the total sales price among the house and any assets that may have been entered separately (for example new roof, appliances, improvements).

To do this in the TurboTax Home & Business, please follow these steps:

Click on Business > Continue > I'll choose what I work on.
On the screen, Let's gather your business info, click Start/Update next to Rental Properties and Royalties (Sch E)
On the Income from Rentals or Royalty Property You Own screen, click Yes.
If you have already entered information about your rental (or transferred it from the previous year), you will come to the Rental and Royalty Summary screen. Click on the Edit box next to the property.
Continue through the screens, entering the requested information.
On the screen, Do Any of These Situations Apply to This Property? mark the box that you sold or disposed of the property in 2019.
When you come to the screen, Review Your [XX] Rental Summary click the Start/Update box next to Sale of Property/Depreciation.
If you have assets entered already, on the screen, Do you want to go directly to your asset summary? mark the Yes radio button and click Continue.
Click Edit next to the property.
If you haven't yet entered any assets, continue through the screens to enter the house.
On the screen, Tell Us More About This Rental Asset, mark the box that the item was sold and enter the date of the sale.
The next screen allows you to enter or confirm your prior depreciation .
You will eventually come to a screen to enter the sales information.
Continue through the interview, entering the requested information.
You will be brought back to Your Property Assets. If you have other assets related to this property, follow the same procedure with them by clicking Edit on an existing asset [or Add an Asset].

R

Rick1946Author

Thanks for this but I'm not sure I explained things properly. The property was rented from Jan to about May but we did not receive any rent. When we finally got the renter out, we had to spend A LOT of money to get the property cleaned out and repaired so it could be rented again. Toward the end of this process an individual in the apt complex made an offer to buy the property. We decided at that time to sell rather than continue to rent.

My thought is that I should charge the fix up as expenses to the rental property even though we had no rental income and only charge the commission, closing costs et al to the sale.

Thanks again,