Yes, you would be able to claim your proportionate share of the capital loss for the sale of the rental property based on your ownership percentage.
(Please note that as a co-owner of this rental property, you should have included your share of the rental income, expenses and losses on the rental property on your individual tax return. Just make sure that you keep a record of the sale with your tax files for future reference.)
Additionally, when
you sell a property that was used as a rental, you must pay 25 percent
recapture tax (also referred to as Section 1250 recapture) as well as regular
state income tax on the depreciation you claimed. (Remember the IRS will assume
that you claimed the correct amount of depreciation every year—this is true regardless of whether you
actually claimed any depreciation on your tax return).
Click this link for further information about reporting
the sale of a capital asset
You will enter your proportional share of the rental property under the sale of a business
property in TurboTax Online or Desktop, please follow these steps:
- Once you are in your tax
return, click on the “Business" tab ("Federal Taxes" tab in
Premier)
- Next click on “Business
Income and Expense" ("Wages and Income" tab in Premier)
- Next click on “I’ll choose
what I work on” (Jump to full list)
- Scroll down the screen until
to come to the section “Less Common Business Situations” ("Business
Items" in Premier)
- Choose “Sale of Business
Property” and select “start’
- Select "Sale of business
or rental property that you haven't already reported"
- Sale of Business or Rental
Property - yes
- Enter all the information
about your Rental Property Sale here
- Description -
address of property
- Date acquired - original
acquisition date
- Date sold - date of sale
(should be on 1099-S)
- Total sales price - total
sales price (should be listed on 1099-S)
- Cost of property (or tax
basis) plus expenses of sales - original cost plus any capital
improvements plus expenses of sales
- Depreciation taken on this
property - total depreciation taken property when rental (Please note the
IRS will assume that you have taken the correct depreciation on your
rental property while your property was available for rent regardless of
whether you have actually take it or not)
- What type of property is
this? - select - Rental estate that I took depreciation on.
- Installment sales - no if not
on installment sale
- 2 screens that show the
summary of what you have entered for your property sale
- Sale of Other Business
Property - Choose yes if any of these situation apply, otherwise choose
no.
- You sold property
that cannot be depreciated such as vacant land, mineral rights or
inventory
- You sold business or rental
property that you owed for one year or less
- You sold business or rental
property at a loss.
- Total Gross Proceeds - enter
your 1099-S sales information here (this could be the same amount that was
reported earlier as sales price)
