Carl
Level 15

Investors & landlords

First, be aware that there is an ongoing issue with the Assets/depreciation section of the program, but only if you're using the online version.  According to my screen, you are using the CD/Desktop version that you installed on your windows or mac computer.

I had a hard time with the rental because Turbotax kept deleting it because the income was zero.

That's not why the program kept deleting it. It deleted it because you selected the checkbox that reads "I did not rent or attempt to rent this property in 2020". Since you did at least "attempt" to rent it in 2020, do not check that box.

Then  you can report the sale in the SCH E section of the program. Take note that even though you had no rental income in 2020, you *MUST* enter a digit in the income, even if that digit is ZERO.

Meanwhile, if you had no rental expenses in 2020, you don't even have to work through that section at all. More than likely you still had to make mortgage payments for 4-5 months, so you will be working through the expenses section anyway, even if the only thing you enter is the mortgage interest.

Then after finishing the rental income and rental expenses section, you can work through the Sale of Assets/Depreciation section to report the sale. That way, the program will do the required math "for you", in the background. (Mainly dealing with the required depreciation recapture.)

Here's the general guidance. Note that you will "not" indicate you converted the property back to personal use in 2020. If you do, then you "have" to report it in the sale of business property section, which means you have to do all the required math yourself, manually.

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.