Yes, you can report the sale following the steps below. The sales price and sales expenses would be divided in half so that each reports their share of the sale. This assumes you each reported rental income and listed had half of the property on each of your returns (brother and sister individually).
If you received one Form 1099-S for the full amount of the sale, then you may want to nominee half to the person whose social security number is not listed on the form.
Nominee returns.
Generally, if you receive a Form 1099 for amounts that actually belong to another person or entity, you are considered a nominee recipient. You must file a Form 1099 with the IRS (the same type of Form 1099 you received). You must also furnish a Form 1099 to each of the other owners.
File the new Form 1099 with Form 1096 (this is a transmittal for the 1099) by mailing to the Internal Revenue Service Center for your area. (Provided on the Form 1096)
- On each new Form 1099, list yourself as the payer and the other owner, as the recipient. On Form 1096, list yourself as the nominee filer, not the original payer. The nominee is responsible for filing the subsequent Forms 1099 to show the amount allocable to each owner.
The forms filed with the IRS should be the red copy so if you don't have a color printer, go to the IRS website and order the forms here:
This will allow you to enter only half of the gross proceeds on your return.
The IRS requires that the selling price be proportionately prorated to arrive at a selling price for each 'piece' of a rental property since many assets can be placed in service at different times, such as your roof.
The selling price should be prorated for each asset then entered for each asset when you indicate they were sold or disposed of. You will not lose the remaining depreciation because you will use the remaining basis against the selling price to determine gain or loss.
To figure out the selling price for each asset:
- Take the current basis of each asset against the total combined basis of all of your assets to figure out the sales price for each one; OR
- Determine a fair market value for each asset against the total value of all assets to figure out the sale price for each one.
Use the original cost of each asset listed on depreciation (all belongs to house B now) add those together then divide each one by the combined total to find the percentage of the cost for each asset. Use that percentage times the sales price and sales expenses to find the selling price/sales expenses for each asset.
Example: Original Cost (of each asset on your depreciation schedule)
$10,000 Land = 13.33%
$50,000 House = 66.67%
$15,000 Improvements = 20%
$75,000 Total = 100%
Multiply each percentage times the sales price/sales expenses to arrive at each individual sales price/sales expense.
I hope this example provides clarification to enter your sale.
You need to dispose of the property by telling TurboTax how and when it was disposed of. Follow the instructions below.
- Click on Income & Expenses
- Under Your income and expenses, scroll down to
- Rental properties and royalties, click Edit/Add
- Do you want to review your rental?, click Yes
- Under Rent and Royalty Summary, click Edit
- Click Update to the right of Assets/Depreciation.
- Do you want to go directly to your asset summary?, click Yes and Continue
- Click Edit to the right of each asset to be disposed
- Go through several screens until you get to Tell Us More About This Rental Asset
- Click on This item was sold……. And continue to answer the questions
You might also review information here.
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