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inherited rental

I am reading conflicting info about where to report sale of an inherited rental. Is the sale reported in the rental income section, the investments (stocks,crypto,mutual-other) section, or the sale of a second home section?(Using premier on my desktop). Please help!

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3 Replies
ThomasM125
Expert Alumni

inherited rental

If you have been reporting the rental on your tax return, you have a couple of options to report the sale of the property. One is in the business section of TurboTax, on the screen that says Let's gather your business info. Find the Less Common Business Situations menu and choose Sale of Business Property. That will work if you know the sale proceeds, cost basis of the property and the accumulated depreciation.

 

Your other option is to edit the asset entries in the business/rental section of your return and assign a portion of the sale proceeds to each asset, thereby reporting the sale of each one of them. Typically, you can assign a sale price of $0 to all the assets but the home or building in the case of a rental property. 

 

If you mean the property had been rented by the deceased and you acquired it and then sold it, but were not reporting the rental income on it, you can report it as an investment sale as follows:

 

You enter investment sales in the Wages and Income section of TurboTax, then Investment Income, then Stocks, cryptocurrency, Mutual Funds, Bonds, etc... Skip the section where it asks if you want to upload your tax documents. Choose Other as the type of property and on the screen where you enter the sales proceeds and cost, choose Land (personal use) or Land (other investment purpose) depending on which options applies to you. If you used the property for personal purposes, it becomes a second home and you can't deduct a loss on the sale.

 

 

 

 


 


 

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inherited rental

Thank you so much. I did get rent in 2025 from Dad's tenant until I sold it in August 2025. Still third option? (FMV is almost about breakeven.)

 

I really appreciate your response! thank you!

 

 

ThomasM125
Expert Alumni

inherited rental

The correct way to report the rental asset sale would be one of the first two options, as they will properly account for the depreciation on assets. However, if you don't have a gain on the sale either method will likely result in the same or similar tax liability. When you sell depreciable assets and you have a gain, the portion of the gain up to the amount of depreciation allowable gets taxed at ordinary income tax rates up to 25%, as opposed to being taxed at capital gain tax rates that are normally 15%. But if you don't have a gain, that doesn't matter as there is no income being taxed.

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