I am trying to figure out just how to file sale of a Rental Property that was a Primary Residence under the rules of Pub 523 (Exceptions to the Eligibility Test => Service, Intelligence, and Peace Corps personnel => Qualified extended duty). I I cannot use the "Served in the US Armed Forces" checkbox (per the question under Personal Info => "You & Your Family" in TurboTax Home & Business), but don't know if that matters to getting this input properly.
Rough Timeline:
1991: purchased home
1991 - 2001: Primary Residence
2001 - 2006: Converted to Rental Property
2006 - 2010: Primary Residence
08/2010 - 02/2018: Converted to Rental Property (on orders per exemption in Pub 523)
02/2018 - 06/03/2020: Remained Rental Property, but I was no longer on orders
06/26/2020: Property Sold
Purchase Price: $115K
Depreciation over the period of rentals (~15 years): $51K
Sale Price: $250K.
Using this timeline based upon Pub 523 adds about 7.5 years to the 2 of 5 year test period, becoming a 2 of 12.5 year test period. I had 2.5 years in the property as my Primary Residence. When entering this Rental Property sale into TurboTax, it appears to be charging me Tax on the Capital Gains and does not ask me anything related to the exemption for a Primary Residence. This sale generates a jump in tax of over $31K when I was only expecting about $13K for the Depreciation Recapture.
How do I enter this sale in TurboTax to take advantage of the tax code? Do I have to first convert this property out of rental status (somehow)?
Thank you.
