Investors & landlords

Since the last occupant to move out of the property prior to the sale, there's really no reason the property can't remain classified as rental property. The only thing is, on your 2019 return after you import the rental stuff from your 2018 tax file, do not select the option for "I did not rent or attempt to rent this property in 2019". If you select that option, you will be "FORCED" to delete the SCH E from your 2019 return. You will also select the options to indicate that you "converted this property to personal use in 2019" and "I sold or otherwise disposed of this property in 2019."

Just indicate it was rented zero days, with ***ZERO*** days of personal use.  Rental income will be ZERO.

There will be no rental expenses. But you still have to work through the expenses section in order to enter the mortgage interest, property taxes and insurance paid.

Next will be the "Sale of Assets/Depreciation" section. Work through each individual asset one at a time and when asked if you stopped using this asset in 2019, select YES with a stop/disposition date of 1/1/2019. This stops depreciation on 1/1/2019.

You will also indicate that you sold or otherwise disposed of the asset in 2019. Then on the "Special Handling Required?" screen, select NO. Then you will be asked for your sales information on that particular asset.

Take note that with the above you are *NOT* asked for percentages on anything. But if you are asked for percentage of business use on any screen, your answer will be ONE HUNDRED PERCENT business use. This is because you are being asked for the business use percentage FOR THE TIME IT WAS CLASSIFIED AS A RENTAL. What you did with the property while it was personal use *DOES* *NOT* *COUNT*.

Now the above is the preliminaries. Below are a bit more specifics that matter big-time, if you have more than one asset listed in the "Sale of Assets/Depreciation" section.

This is a boilerplate response below. So that's why I provided more specifics for your particular situation above.

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.