Sale of Rental Property - 2020 Two Questions

Forum|Forum|5 years ago
March 17, 2021
2 replies
0 views

I am using the Premier Desktop version of Turbotax. The rental property in question was purchased May 1995, converted from personal use to rental on 1/1/2002, and used exclusively as a rental from that point until it sold on 1/8/2020. 2 questions

1. Where do I report the sales price of the property? I confirmed the home was sold and have entered all but one number in the depreciation section (See question 2 for more info on that). I have entered our 1995 purchase price, the date the home was converted from residential to a rental property, the amount of depreciation we have taken, and the date we sold the home. NOWHERE has it asked for the sales price. I've used the edit feature to review my information more than once but cannot find any further questions. What am I missing?

2. Land value in depreciation section - I have no idea what number to use here. I do not have the property tax bill from 26 years ago. Land value is not included on our current tax bill, so I'm not convinced it would have mattered anyway. All my current tax bill shows is fair market value of the property and assessed value (which is simply 40% of fmv).

ThomasM125

You should go to the asset section and edit the house and indicate that you sold it, you will see this:

After that you will see an entry for the sale price.

The land can be significant since you can't depreciate it, so the gain on sale of it is taxed at favorable capital gains rates. But you can leave it blank, as it will not understate your tax, it would just increase it.

**Say "Thanks" by clicking the thumb icon in a post**Mark the post that answers your question by clicking on "Mark as Best Answer"

PetersbkAuthor

I had already done this. I checked the box saying the item was sold and listed the sale date as 01/08/2020. The next screen asked me to confirm my depreciation taken over the years. After that I checked "yes" on the special handling page because the percentage of business use varied over the years we owned the property. Turbotax calculated allocated depreciation allowed and said we were done. Never was I asked any questions about the sale.

Carl11_2

Employee

Here's the guidance for reporting the sale of your rental property. Doing it this way, the program will take care of the math (land value, depreciation recapture, etc.) *for you*. Just heed and follow the guidance below, if you have multiple assets listed in the Sale of Property/Depreciation section.

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 2020". Select it. After you select the "I sold or otherwise disposed of this property in 2020" 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 if it's zero. Then you MUST work through the "Sale of Property/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 on some assets. Likewise, if you sold at a loss then you must show a loss on all assets, even if that loss is $1 on some assets.

Basically, when working through an asset you select the option for "I stopped using this asset in 2020" 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.

PetersbkAuthor

I'm still not having any luck. I marked that the property was sold and then disposed of the house in the depreciation section. I confirmed the amount depreciation taken over the years and then checked yes on the special handling page because the business use percentage of the home varied over the time of ownership. I've entered the purchase price of the home, the date it was converted from a personal residence to a rental, and the sales date. Turbotax still is NOT asking for any info regarding the actual sale. The program calculated the allowable amount of depreciation for 2020 and then said we were done with that asset.

Carl11_2

Employee

checked yes on the special handling page because the business use percentage of the home varied over the time of ownership.

That's the problem. If you check YES, you are telling the program that you did *not* sell the property. You must select NO.

Understand that even though the business use percentage varied over the years, if the total depreciation shown to you in the program (prior year's total and current year) is the correct amount of depreciation taken on the property, up to the date of the sale, then you're good. All of that depreciation will be recaptured as it should be.But for that to happen, you must select NO on the special handling required screen. Only then will you be asked for sales information on that specific asset.