Yes, you owe capital gains tax on the gain from the sale of the house that was not depreciated.
For the $27K that was depreciated it is recaptured when you sell the house and is taxed at the same tax rate as the rest of your income.
You report that sale of the rental property in the rental section of TurboTax.
- With your return open in TurboTax, search for rentals and then select the Jump to link in the search result.
- Answer Yes to the question Did you have any rental or royalty income and expenses in 2019 for property you own?
- When you get to Is This a Rental Property or Royalty? select Rental property and fill out the description, address, and owner.
- When you hit Do Any of These Situations Apply to This Property? check the Sold box along with any other boxes that may apply.
- Continue following the onscreen prompts to enter info about your rental property. Eventually you'll get to the Review Your [Property] Rental Summary screen. You can report the sale in the Sale of Property/Depreciation section, along with any other pertinent info (like income and expenses)
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.
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