Investors & landlords

No, do not break the property up into two sales. You have used this property as your primary residence full time as of January 1, 2017, and there has been no rental activity since that date in either of the units.

When you enter the home sale in TurboTax it will ask for a couple of items that are needed to report the sale correctly.  

1. The total depreciation expense that was allowed during the period it was available for rent.  Check your prior tax returns for this figure.
2. The number of days the property was available for rent during the ownership period.

Results:

1. The amount of depreciation that was allowed will be completely taxable up to the amount of gain received on the sale.
2. The remaining gain if any, will be split between taxable and and amount eligible for exclusion by using the following formula.
   • The total days available for rent will be divided by the total days owned to determine the portion of the remaining amount of gain that is taxable for the rental period
   • The balance will be eligible for the home sale exclusion
3. TurboTax will do all the calculations based on your entry

Let's go step by step to enter your sale. 

1. Scroll to Less Common Income > Select Sale of Home (revisit or update) 
2. Continue to indicate you sold your home > Edit or add your home address and ownership > Continue
3. Enter the Sales date, Selling Price and Sales Expenses > Continue
4. Enter the Date Acquired and the Cost of the Home (includes any capital improvements for the period of ownership (do not reduce for depreciation expense) > Continue
5. Continue past the 'Less than two years' screen > Yes the home was not used for anything else > Enter number of days
6. Continue > Select No another home was sold after _____ date > Select ownership if married  > Continue
7. Select Yes for Depreciation After May 6, 1997 for both of you if married > Continue to answer the remaining questions