Deductions & credits

Since your rental property is on your tax return the process stays in the rental section.  Do not add an additional sale under Sale of Business Property. This would only duplicate the sale.

Do not alter or modify prior depreciation. This would have carried on from the first property before the section 1031 exchange as it should have. There should be nothing to alter.  The section 1031 transaction allowed at least some deferral of gain which is the intent. And as our awesome tax expert explained it's 'pay me now or pay me later'.  This is the time you will pay tax on the gain.

Do not enter another asset - the rental property you have in your return is the old property which is exactly the same as the property you received in the 1031 exchange.  There is nothing to change here.

You need to dispose of the property by telling TurboTax how and when it was disposed of.  Follow the instructions below.

1. Click on Income & Expenses (or Business Income and Expense)
2. Under Your income and expenses, scroll down to
3. Rental properties and royalties, click Edit/Add
4. Do you want to review your rental?, click Yes
5. Under Rent and Royalty Summary, click Edit
6. Click Update to the right of Assets/Depreciation.
7. Do you want to go directly to your asset summary?, click Yes and Continue
8. Click Edit to the right of each asset to be disposed
9. Go through several screens until you get to Tell Us More About This Rental Asset
10. Click on This item was sold…….   Enter your dates
11. Answer No to Special Handling Required And continue to answer the questions
12. Answer No to main home then continue to enter your sales price, sales expenses
13. See images below.

You might also review information here.  Please update if you need further assistance.