Carl
Level 15

Investors & landlords

The property remains classified as Residential Rental Real Estate. When you start working through the property do not (*NOT*) select the option for "I did not rent or attempt to rent this property in 2019". If you select that option, then the program will *FORCE* you to delete that property entirely. So don't do that.

For "days rented" (if asked for this) enter a 1. For rental income, you can't leave it blank. So enter the digit ZERO for rental income.

Any rental expenses incurred can and should be entered.

Any property improvements done after the last renter moved out are still entered in the Assets/Depreciation section. However, for those improvements you will indicate zero percent business use. If the program "insist" on a percentage of use greater than zero, then just make the "in service" date the date you closed on the sale, and the business use percentage at 1%. Try 0.1% if it'll accept that value. Basically, you need to add any property improvements so as to show the increased cost basis on the property, prior to reporting the sale. This in effect, reduces your taxable gain on the sale, or increases your losses on the sale if sold at a loss.

 

When you report the sale, all of your carry over losses including your 2019 rental expenses will be deducted first from any taxable gain realized on the sale, and then from other ordinary income (such as W-2 income).