Question

sale of rental house

Forum|Forum|5 years ago
March 6, 2021
2 replies
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I rented a home for part of 2020 and then sold it. I input the rental information and checked the sold box. I then entered the rental income but and cannot find any place to enter the income from the sale of the house. The TurboTax rental property tip say I should be able to enter it in the "Expenses/Assets (Depreciation)" section but I don't see any section with that name. I do see a "Sale of Property/Depreciation" section but there is no prompt for sale, only for depreciation. How or where do I input the income from the sale of the rental house?

M

MAK70

See I sold my rental property. How do I report that? - TurboTax

The Internal Revenue Service considers rental property to be business property, so you can't just report the gain or loss on your Form 1040. You must also complete and file IRS Form 4797, Sales of Business Property. If your rental property is a home, it's a Section 1250 property, so you must complete Part III of the form to determine if you have a gain.

W

Welsh1Author

Thank you. In terms of entering the information into TurboTax, does it go under Rental Properties and Royalties or Business Items?

Carl11_2

Employee

Assuming the last occupant to vacate the property prior to the sale was a tenant, report the sale in the SCH E section of the program. That way, the program will do almost all of the math *FOR YOU*.

Reporting the Sale of Rental Property

If you qualify for the "lived in 2 of last 5 years" capital gains exclusion, then when prompted you WILL indicate that this sale DOES INCLUDE the sale of your main home. For AD MIL personnel who don't qualify because of PCS orders, select this option anyway, because you "MIGHT" qualify for at last a partial exclusion.

Start working through Rental & Royalty Income (SCH E) "AS IF" you did not sell the property. One of the screens near the start will have a selection on it for "I sold or otherwise disposed of this property in 2019". Select it. After you select the "I sold or otherwise disposed of this property in 2019" you continue working it through "as if" you still own it. When you come to the summary screen you will enter all of your rental income and expenses, even it it's zero. Then you MUST work through the "Sale of Assets/Depreciation" section. You must work through each individual asset one at a time to report its disposition (in your case, all your rental assets were sold).

Understand that if more than the property itself is listed in your assets list, then you need to allocate your sales price across all of your assets. You will only allocate the structure sales price; you will NOT allocate the land sales price, since the land is not a depreciable asset. Then if you sold this rental at a gain, you must show a gain on all assets, even if that gain is $1. Likewise, if you sold at a loss then you must show a loss on all assets, even if that loss is $1

Basically, when working through an asset you select the option for "I stopped using this asset in 2019" and go from there. Note that you MUST do this for EACH AND EVERY asset listed.

When you finish working through everything listed in the assets section, if you ever at any time you owned this rental you claimed vehicle expenses, then you must also work through the vehicle section and show the disposition of the vehicle. Most likely, your vehicle disposition will be "removed for personal use", as I seriously doubt you sold your vehicle as a part of this rental sale.