Yes, you may be able to claim a partial exclusion for the sale of your home even though you do not meet the 2 out of 5 year rule. You may qualify for the special rules for members of the Military or Foreign Service. This can extend your lookback period for an additional 5 years or a total of 15 years.
To enter this into TurboTax, select the following:
- Federal
- Income
- Sale of Home under Less Common Income
- Enter your home information
- Select No to did you live in your home for Time you lived in your home
- Say yes to did you use your home for anything else and enter the number of days it was a rental
- Continue through to Reason for Sale hit continue
- On the Other Reasons for Sale select Military, Foreign Service, intelligence community employee, peace corp and continue
- Yes to Depreciation after May 6, 1997
- Enter the Depreciation amount
When you walk through the steps to report the sale of the rental property, TurboTax will ask you how much depreciation you have taken. If you have used TurboTax every year, and import your last years return, that number will be auto populated. The depreciation will be from December of 2016 until you sold the property. To easily get to the questions for the sale and depreciation recapture, after you enter the property address (or click edit if it is already there) the next screen will be "Do any of these situations apply to this Property?" You will select "I sold or disposed of this property in 2023". Next select Sale of Property/Depreciation then walk through the steps to enter the information about the house and sale. About 3 screens in you will come to the depreciation screen where you can enter the accumulated depreciation to be recaptured.
(Edited 1/30/24 @ 12:08PM PST)
@jmbland
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