If you lived in the rental for at least 2 of the 5 years preceding its sale, you may choose to treat its sale as the sale of your primary residence and exclude the gain on that sale. You will have to treat your recaptured depreciation as income, however.
If you are choosing to then treat the rental as the sale of your main residence, do not report the sale through the rental section, instead, report it as "sale of home" instead. You can access this area of your return by typing "sale of home, exclusion" into the search box and clicking on the "Jump to" link. Follow the programs prompts to complete the information about this sale. At some point in the process, the program will ask you to enter the depreciation you've taken on the property. You'll want to have that information available.
You will treat the sale of your other home as the sale of a second home.
Sales expenses include:
- commissions
- appraisal fees
- broker's fees
- legal fees
- advertising fees
- home inspection reports
- title insurance
- transfer taxes or fees
- geological surveys
- loan charges (points) or other fees paid on the buyer's behalf
Sales expenses do not include:
- mortgage payoffs
- home equity loan payoffs
- rent-back costs
- payoff to creditors
- property taxes
- homeowner association fees
