inherited rental

You can report this strictly in the rental income section. Here are the steps.

Step 1: Access the Rental Section

1. Open your return and go to Federal > Wages & Income.
2. Find Rental Properties and Royalties (Schedule E) and click Start or Update.
3. If you have already entered the property, click Edit next to it. If not, follow the prompts to add the property details.

Step 2: Trigger the Sale Walkthrough

1. Navigate to the Property Profile or General Info section.
2. Look for a screen titled "Do any of these situations apply to this property?" (or "Tell us about your situation this year").
3. Check the box for "I sold or disposed of this property in 2025."
4. Continue through the screens. Enter your rental income (Jan–Jun) and expenses as usual when prompted.

Step 3: Report the Asset Sale (Crucial Step)

1. TurboTax doesn't ask for the 1099-S details on the main rental screen; it asks for them under the Assets/Depreciation section.
2. Scroll down to Assets/Depreciation and click Start/Update.
3. You should see the "House" or "Residential Rental Property" listed as an asset. Click Edit.

On the screen "Did you stop using this asset in 2025?", select Yes.

• Enter the Date of Sale (August 2025).
• Sales Information Screen: This is where you enter the data from your 1099-S:
• Sales Price: The amount from Box 2 of your 1099-S. 
• Selling Expenses: Commissions, legal fees, and title insurance paid at closing.
• Cost Basis: Since this was inherited, your "Cost" is the Fair Market Value on the date of the donor's death in 2024 (the "step-up").