I sold a single-family rental property in March of this year. It originally started as my primary residence, but I moved and have been renting it out for the last 10 years. This year I have not had a tenant since it was on the market and sold in March.
Under the "Business" tab I clicked the "Property Profile > General Property Information" update button. Made sure it was still marked as "rental property" > "single family". Then I checked that "I sold or disposed of this property in 2020"
My question is, on the next page where it asks how much of the year was it rented, I marked "no, this property was not rented all year" and then "0" days for each "days rented" and "personal use" and then I checked the box that said "I did not rent, nor attempt to rent this property at all in 2020". However, at that point I got the message... (Screenshot also attached)
Since this property was not a rental at all in 2020, you should delete it as a rental. Make sure to keep your complete return, including the Depreciation Report for this property, from 2019 (or the last year this property was used as a rental). You'll need that information when you sell the property or convert it back to a rental.
I want to clarify if I should actually delete it under my rental property section from the "Business" tab. If so, where do I enter the sale? My guess would be under the "Personal" tab and then "Less Common Income" > "Sale of Home (gain or loss)"... HOWEVER, this appears to be for main homes only. Per the IRS I need to enter this on Form 8949 since my rental activity didn't rise to the status of a trade or business. Where does this need to be entered?
