sale of rental property

How you report the sale, depends on how you treated the property as a rental.

Did you set things up to indicate you rent out a multi-unit structure where you live in one of them as your primary residence? Or did you treat the rental portion and the primary residence portion as two physically separate properties in TurboTax?
Basically, you'll be reporting two sales. One is for the sale of the rental portion where you will have to recapture depreciation and will not qualify for the capital gains exclusion if that portion was not your primary residence for at least 2 of the last 5 years you owned.

The other sale will be for the sale of that portion which was/is your primary residence, where you will qualify for the capital gains exclusion if it was your primary residence for at least 2 of the last 5 years you owned it.

This can (and probably will) get complicated; especially if your state taxes personal income.

Treat the sales separately--one as the sale of a rental property; the other as the sale of your principal residence.  TurboTax will prepare the necessary forms (including Form 4797).  [Just remember to divide the totals in half!]

Rental properties, as you know, are reported on Schedule E - Supplemental Income.  You will have to apportion the total sales price (for the rental portion) among the house and any assets that may have been entered separately (for example new roof, appliances, improvements).

To do this in TurboTax Premier (Windows), please follow these steps:

1. Click on Federal Taxes > Continue > I'll choose what I work on.
2. On the screen, Your 2022 Income Summary, in the Rental Properties and Royalties section, click the Start/Update box.   
3. On the Income from Rentals or Royalty Property You Own screen, click Yes.
4. 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. 
5. If you haven't yet entered any information about the property, you will see a screen, Is This a Rental Property or Royalty?  Mark the button for Rental property and enter information about the property. 
6. Continue through the screens, entering the requested information.
7. On the screen, Do Any of These Situations Apply to This Property? mark the box that you sold or disposed of the property in 2022. 
8. When you come to the screen, Review Your Rental Summary click the Start/Update box next to Sale of Property/Depreciation.  
9. 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.
10. Click Edit next to the property.
11. If you haven't yet entered any assets, continue through the screens to enter the house.
12. 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.  
13. The next screen allows you to enter or confirm your prior depreciation.
14. You will eventually come to a screen to enter the sales information.
15. Continue through the interview, entering the requested information.
16. 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].

If the house (the non-rental half) was your personal residence for two of the last five years, gain of up to $250,000 ($500,000 for married filing jointly) is excluded from tax and you do not have to include the information in your return.

The sale of a principal residence is generally not reported on a taxpayer's return unless the taxpayer:

• Has a gain and does not qualify to exclude it all.
• Has a gain and elects not to exclude it.
• Receives a Form 1099-S for the sale.

If you wish to enter the sale of your principal residence in TurboTax to determine if there was a gain, please follow these steps:

1. Click on Federal Taxes > Wages & Income
2. Under Less Common Income, click on the Start/Revisit box next to Sale of Home (gain or loss).  
3. On the screen Sale of Your Main Home click the Yes box.  
4. On the Sold A Home screen, review the information you will need to enter and click Continue.  
5. On the Sales Information screen, enter the date sold, selling price, and expenses.
6. On the next screen, Tell Us About the Purchase of Your Home, enter the date you bought or acquired your home.
    
7. Also enter the Adjusted Cost Basis.  For help in calculating the adjusted cost basis, click on the EasyGuide box.

Once you've entered all the information, TurboTax will calculate the gain for you.

(From IreneS)