Should I describe the rental farm I sold as "residential rental real estate"? The "residential" part doesn't seem to fit my case, but the other TT choices are worse.

Forum|Forum|3 years ago
February 24, 2023
2 replies
0 views

I sold an investment farm in 2022. TT is prompting me to "describe this asset." The only choice that is close is "rental real estate property." However, when I select that option I'm then asked to categorize the asset as "residential rental real estate," "appliances, carpet, furniture," or "land improvements." The farm was rental real estate, but the term "residential" makes me think I'm doing something wrong. Any advice would be appreciated.

TurboTax Premier Online

PattiF

The sale of the farm is entered in the investment sales section. You can rent a farm and have expenses for the rental, but the farmland is not depreciated in the way that residential rental property would be.

To enter the sale of the farm:

Click on Federal > Wages & Income

In the Investment Income section click on the Start/Revisit box next to Stocks, Mutual Funds, Bonds, Other. If you have already entered some investment sales, you will see a screen Here's the investment sales info we have so far. Click on the Add More Sales link.
If you haven't yet entered some investment sales, you will see a screen Did you sell any investments in 2022? Click the Yes box.
On the screen, OK, what type of investments did you sell? mark the Other box and click Continue.
When you get to the screen, Now we’ll walk you through entering your sale details, enter the details of the sale. You will be able to select the type of investment in the first box [second home, land, etc.]
Enter the requested information and click Continue when done.

You will need to determine the cost basis for the land. You can add the closing costs and other expenses of the farm purchase to the cost basis.

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

ligneous-gasp-diAuthor

Thanks for your help.

Carl11_2

Employee

While you will report the sale in the investments section, if you have been reporting farm rental income on SCH E, then you need to work through each asset on that SCH E and show it was "converted to personal use" on the closing date of the sale. This is especially important if you sold any farm assets that were depreciated, so you can get the correct amount of depreciation on that asset, which has to be declared and recovered/taxed when you report the sale in the investment section. Overall, the land itself is not depreciated. But if you had any other assets such as a structure (barn maybe?) or farming equipment that was sold, you have to account for all depreciation taken on those assets.