Reporting the sale of a depreciable asset (like a vehicle, equipment, or rental property) requires you to "recapture" the depreciation you claimed in previous years.
Instead of going directly to a "Sales" section, you must go through the Assets/Depreciation area of your business or rental profile.
Depending on what the asset was used for, follow one of these paths:
Business Asset (Schedule C): Go to Wages & Income > Self-Employment > Expenses > Assets/Depreciation.
Rental Asset (Schedule E): Go to Wages & Income > Rental Properties and Royalties > Assets/Depreciation.
Once you are in the Asset Summary list:
- Click Edit next to the specific asset you sold.
- Proceed through the screens until you see the question: "Did you stop using this asset in 2025?" Select Yes.
- Enter the Date of Sale.
- Enter Sales Information: TurboTax will ask for the Sales Price and Sales Expenses (like commissions or legal fees).
Multiple Assets in One Transaction: If you sold multiple assets in one transaction (like a house, a new HVAC system, and a refrigerator), you should allocate the total sales price among them based on their relative value.
Special Handling for Land: If you sold a rental property, you must split the sales price/sales expenses between the Building and the Land. Since land isn't depreciable, TurboTax handles that gain separately from the building's depreciation recapture.
When you sell a depreciable asset, TurboTax generates Form 4797 (Sales of Business Property). Here is how that completed form will look:
- Depreciation Recapture: If you sell the asset for more than its "Adjusted Basis" (Original Cost - Depreciation), the portion of the gain that comes from the depreciation you took is taxed at ordinary income rates.
- Capital Gain: Any profit above your original purchase price is typically taxed at the lower Long-Term Capital Gains rate (0%, 15%, or 20%).
- Ordinary Loss: If you sell the asset for a loss, it is usually treated as an "Ordinary Loss," which can offset your regular income without the $3,000 limit that applies to stocks.
**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
