@ntheath2004 You will need to set the property up for rental in your 2021 TurboTax program. like you did originally. In the profile interview section, you will see a screen that says Do any of These Situations Apply to This Property, for which one option will be I have Passive activity real estate losses carried over from a prior year. When you check that box, you will be able to enter your passive loss carryover amount. You will also see an option for I sold or disposed of this property in 2021, you need to check that box so the carryover loss will be reflected on your tax return in 2021.
After you enter your rental profile information, you need to look for the option Sale of Business Property in the Less Common Business Situations on the page that says Lets gather your business info. Update that option and indicate that you have Sales of business or rental property that you haven't already reported, and enter the sale and property information requested.
When you are finished, you will see the carryover loss reported on schedule E, line 22 and also on line 26, and it will flow to schedule 1, line 5 as a negative amount for rental real estate income. The gain or loss on the sale of the house will appear on form 4797 and schedule D.
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