Yes, it will be treated as Section 1231 loss . The rental income and expenses attributable directly to the rental period will be reported under the rental income using Schedule E. The rental property itself cannot be listed as a depreciable asset in the rental activity section because you cannot depreciate property that is placed in service and removed from service in the same tax year.
However, the sale will be reported as follows in TurboTax.
- Go to Less Common Business Situations
- Scroll to Sale of Business Property
- On the next screen select Sales of business or rental property you haven't already reported
- Answer the remaining questions as it pertains to your situation (holding period, etc.)
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