1. I sold a rental home for a profit. Turbo tax sh...
New Member

1. I sold a rental home for a profit. Turbo tax shows that the entire profit amount as earned income. Do I pay taxes on the entire amount of profit?

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New Member

Investors & landlords

It's not considered "earned" income for tax purpose as are wages and self-employment profit.

You will pay taxes on the entire profit (the sales price plus depreciation allowable minus your investment over the years minus expense of sale). 

Here's a little additional info with some instructions (pay particular attention to the Definitions at the bottom):

You can reduce the selling price of the rental property by the amount of the sales expenses, including the realtor fees. Doing this will either reduce your capital gains or increase your loss on the property, depending on your individual circumstance- either way, it may reduce the amount of taxes to be paid on the sale. TurboTax will make these calculations for you, you just need to enter the data.

In TurboTax, follow these steps to enter the sale of your rental:

1.       With your return open in TurboTax, search for rentals and then click the "Jump to" link in the search result.

2.       Answer Yes to the question Did you have any rental or royalty income and expenses?

3.       When you get to Is this a rental property or royalty? select Rental property and fill out the description, address, and owner.

4.       When you hit Do any of these situations apply? you'll definitely want to check the Sold box along with any other boxes that may apply.

5.       Continue following the onscreen prompts to enter info about your rental property. Eventually, you'll get to the Rental Summary screen. Here, you can report the sale in the Sale of Property/Depreciation section, along with any other pertinent info (income, expenses, etc.)

Tip: Take your time and pay close attention; there's a lot of info and it's easy to miss if you're in a hurry.

Follow the prompts to enter information about the sale of your rental. As you go through the interview, these terms and definitions may be helpful:

·         Sales Price – If you received a Form 1099-S, look in Box 2 (Gross Proceeds), which will generally be your contract sales price.

o    You can also use the Gross Proceeds amount from your settlement closing statement.

·         Sales Expenses for selling your property include:

o    Sales commissions

o    Advertising Expenses

o    Legal Fees

o    Broker Fees

o    Transfer taxes

·         Cost Basis is the rental's purchase price plus buying costs (fees you paid in connection with the purchase such as legal fees, abstract fees, survey charges, owner's title, etc.) plus improvements, minus depreciation.

·         Adjusted basis is the rental's purchase price plus buying costs plus improvements plus sales expenses, minus prior-year depreciation.


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Returning Member

Investors & landlords

I need to know if the Sales Expense of a Rental includes EVERYThing that I paid, Over the Sales price, on my Closing statement? (The Closing agent was an attorney who did not use a standard Hud1.) 

I paid over $20K for both realtor fees, Attorney fees, Recording fees, copy fees, fed ex fees, misc (crap) fees... and need to know if I have to hunt and peck only a select list of items... OR if I can take EVERYTHING that I paid, over the 1099s amt?

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Not applicable

Investors & landlords

we can't see the document so don't what's on it,    the following would not be sales expense but reported on the rental income/loss schedule.   real estate tax proration but not the adjustment for real estate escrow.  that would be neither a selling expense or rental expense.   any charge for interest owed would go on schedule E. payoff of any mortgage would be neither a selling expense nor a deductible rental expense.  from locality to locality the possible items that could be listed number in the 1,000 s.  if you have a question about a specific item post what the document says.   by the way, the selling price and selling costs need to be allocated among the land, building and any other assets listed for the rental property 

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