I am trying to understand how to record the sale of my rental property. I purchased it in 2005 for $350,000 as my primary residence. I converted it to a rental property in 2013. At the time I converted it its FMV was $250,000 although the mortgage I owed was still $350,000 (I/O unfortunately - underwater). I sold the Condo this year for $320,000 with an existing mortgage of $300,000. Over the time I rented the condo I claimed $40,000 in depreciation write-offs. I believe my tax basis would be $210,000 ($250,000 - $40,000). TT is telling me I have a gain of $110,000 although I only walked away with $20,000K from the Sale of the condo less the existing mortgage. Is there somewhere I should be recording what I paid for the property so that my gain (or loss) aligns to what I originally paid for the property?
