Investors & landlords

Carl · ‎March 20, 2020

@MinhT1 I believe is making incorrect assumptions about your sitaution. So lets try this to ensure you are provided the correct information for your tax return.

I was told to claim capital loss by my agent.

Assuming you are referring to your real estate agent, I have no expectations of a real estate agent to know all that much about taxes, and would never seek tax advice from one, much less take the advice or guidance of one as gospel.

I bought my rental for $120,000

In what tax year?

Did you actually rent it out at any time after you purchased it?

and sold it for $105,000.

I am assuming you sold it in 2019.

Is my depreciation $15,000?

Nobody here, including MinhT1 has any possible way of knowing how much depreciation you may or may not have taken on the property.

What matters here is if "you" actually rented it out during your period of ownership and if you correctly reported all of your rental income and expenses in the TurboTax program over the time you owned it - assuming you owned it for more than a year and actually rented it out while you owned it. It also matters if you used the property at any time during your ownership, for personal use. Personal use would be if you lived in the house at any time, for any amount of time as your primary residence, 2nd home, vacation home, or other personal use for your own pleasure and enjoyment.

Ok, so I calculated 3,000 on my rental,

What you do you mean "you" calculated? If you have had this rental for 2 or more years and you have been using turbotax to enter your rental stuff each year, the program figures all this stuff "for you". Besides, if you really came up with a sold figure of $3,000 for depreciation for any period of time, I seriously doubt you figured anything correctly on that.

Lets see if this will help. I am going to assume that you have "in fact" been reporting this rental property for at least a few years with TurboTax, you set it up correctly in that first year in Turbotax, and that you have been entering the data correctly each year. If so, here ya go. ( hate assumptions, because they're usually flat out wrong.)

Reporting the Sale of Rental Property

If you qualify for the "lived in 2 of last 5 years" capital gains exclusion, then when prompted you WILL indicate that this sale DOES INCLUDE the sale of your main home. For AD MIL personnel who don't qualify because of PCS orders, select this option anyway, because you "MIGHT" qualify for at last a partial exclusion.

Start working through Rental & Royalty Income (SCH E) "AS IF" you did not sell the property. One of the screens near the start will have a selection on it for "I sold or otherwise disposed of this property in 2019". Select it. After you select the "I sold or otherwise disposed of this property in 2019" you continue working it through "as if" you still own it. When you come to the summary screen you will enter all of your rental income and expenses, even it it's zero. Then you MUST work through the "Sale of Assets/Depreciation" section. You must work through each individual asset one at a time to report its disposition (in your case, all your rental assets were sold).

Understand that if more than the property itself is listed in your assets list, then you need to allocate your sales price across all of your assets. You will only allocate the structure sales price; you will NOT allocate the land sales price, since the land is not a depreciable asset. Then if you sold this rental at a gain, you must show a gain on all assets, even if that gain is $1. Likewise, if you sold at a loss then you must show a loss on all assets, even if that loss is $1

Basically, when working through an asset you select the option for "I stopped using this asset in 2019" and go from there. Note that you MUST do this for EACH AND EVERY asset listed.

When you finish working through everything listed in the assets section, if you ever at any time you owned this rental you claimed vehicle expenses, then you must also work through the vehicle section and show the disposition of the vehicle. Most likely, your vehicle disposition will be "removed for personal use", as I seriously doubt you sold your vehicle as a part of this rental sale.