Sale of rental property

[briandsmith]

My returns over the last several years have included two rental properties. In 2021 I sold one of them. In this year's version I have answered questions about selling. I am told that the sale info will be input in the sales/depreciation section but it never asks me for a sales price!

I found some instructions on how to report the sale but they direct me to rentals and then are supposed to ask what I am here to report, but I never get that question. It goes straight into the data I have already input, mainly carried over from 2021 and includes my other rental.

Please advise.

[AmeliesUncle · Accepted solution]

Is this what you are doing?

1. In the introductory part of the rental section (where you enter the address, etc.), check the box that it was sold.
2. Edit the "assets" for depreciation.  Look for the check box to say it was sold or disposed, and check that.
3. While still "editing" the "asset", when you get the "Special Situations" screen, in most cases you say "No", there are not Special Situations.  Right after the Special Situations screen, it should start asking about the sale.

[briandsmith]

Thank you for this info.

I was checking "yes" on the special situations screen because it was a rental.

When I check "no" it does allow me to input the sales price.

I guess my question now is "what is the correct answer to the special situations screen in my case?

[DianeW777]

You should answer 'No' to special situations since you sold one complete property.  The special situations are self evident and if they do not apply to you then answering no is the correct response.

[briandsmith]

Thank you but forgive me, this asset was a rental until I sold it at the end of the year?

[AmyC]

Ahh, the wording! If you sold the whole house, the correct answer is NO to special handling. When you click on the Learn More button, it shows: The portion of the home used as a rental or a home office may or may not qualify for the exclusion of gain on the sale of a personal residence. To qualify it must meet several tests. 

[briandsmith]

Thanks again. I checked your recommendation. The sale of this property has nothing to do with my personal home.

Therefore none of those conditions apply to me.

[briandsmith]

I am back doing my return again!

I think I have input the sale correctly but I do not see where it shows up on my Form 1040.

During the interview I input the sales price, original price and depreciation etc and the interview told me what the gain is, but I cant see it on the forms. Should it appear under Capital Gains?

[ThomasM125]

The sale of business or rental property would show on Form 4797 Sale of Business Property and then flow to schedule D and/or schedule 1, line 4. Any depreciation that was recaptured would be reported as ordinary income on schedule 1 and the balance of your gain would show on schedule D, line 11 as capital gain income.

On your form 1040, the income would show up on line 7 (capital gain portion) and/or line 8 (ordinary income portion.)

[briandsmith]

Thank you, yes, I was able to find it and it seems to be input properly. However, I did get form 1099-S from the Escrow people and can't see where this is input? The info on it is all in there.

Then I have a question on the California return. On form 540NR it shows a fairly significant amount of tax on line 31 but by the end of the form, that mysteriously goes away and I get all my withholding back! As I follow the form itself I can't see any further reference to line 31. Line 41 is a place for tax but there is nothing in it.

Does it seem correct to you?

[RobertB4444]

@briandsmith  The 1099-S is informational for you and the IRS.  The sale price amount on the 1099-S goes in as the gross proceeds on schedule D and then the amount of basis and cost of the sale are deducted from that.  So if you're already seeing the amount from the 1099-S In the return then you're all set.

Line 31 is your tax as if you were a California resident.  If line 40 and 41 are both zero then you don't owe anything.

[briandsmith]

Thank you. I must congratulate you all asw experts. I "die" in trying to understand the requirements!

Thank you all for your help

[Rmgood1066]

None of this is working for me. I did not rent the unit at all in 2021, but sold it in February.  When I put in "0" (zero) rental days, it deletes my (only) rental property!  It appears Turbo tax is not set up to sell this property that it has tracked rental income/loss for many years?

[briandsmith]

In checking my taxes I find I have not input the correct amount in line 21of Form 4797. How do I make the change? When I select update against it in the interview I just get a list of questions about other changes and then done.

If I were to delete 4797 from forms, would I be able to start the interview over?

[PatriciaV]

@briandsmith

No, if you delete Form 4797 without deleting the source sale info, the form will be added back automatically.

Instead, go to the sale where you need to enter a different Cost Basis (Form 4797 Line 21).

1. If this is a Rental Property, return to your Rental Property Summary page.
2. Click Edit beside the property that was sold.
3. Scroll down to Sale of Property/Depreciation and click Update.
4. Go to your Asset Summary page.
5. Click Edit beside the asset you sold.
6. Follow the prompts to the page "Tell Us About This Rental Asset.".
7. Update the Cost or Cost of Land as necessary.
8. Continue to the Sales Information page.
9. Update the Sales Price or Expenses, if necessary.
10. Continue to the Results page and confirm the gain or loss is what you expected.
11. Continue to your Rental Summary page for this Rental Property.

If this was for a different type of asset, you can follow a similar sequence to change the cost basis for a business asset or vehicle that was sold.