If you sold at a gain, you will need to claim the depreciation you took on the property when it was being used as a rental, as depreciation recapture. This is taxed as Ordinary Income.
(if you sold at a loss, the recapture could be limited)
I assume it was rented through 11/7/2023 and sold in 2023.
Yes, if it was your primary residence two out of five years you would be eligible for the exclusion.
Be sure to enter the rental income and expenses for 2023 first.
Indicate that the rental was sold.
When you report the sale of the rental, report the sale proceeds as the same as the cost, so if the land is valued at 50,000 and the building at 250,000, report the land sold for 50,000 and the building for 250,000. Therefore no gain.
If the program does not enter the depreciation, you must add the previous depreciation from Tax Year 2022 Form 4562 and the depreciation being claimed for 2023.
This total depreciation will be "recaptured" on form 4797 and transfer to your 1040 line 14.
@MaverickAl
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