Sale of rental property converted from primary res...
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Level 2

Sale of rental property converted from primary residence at a loss

Hi,

In May 2005, I bought a condo at $218,000 + $4,800 closing cost.  I used it as my primary residence.

In Oct 2010, I converted it to a rental.  The FMV at that time was $176,400.  (I reported $176,400 in Turbotax as the 'cost' for depreciation calculation.  Am I correct?) 

I kept renting the condo until I sold it in Feb 2020 at $151,000 and the cost of sale was $10,686. 

Based on Turbotax, depreciation is $59,870.

Given the sale price ($151,000) is below purchase price ($218,000) and FMV when converted to rental ($176,400), I believe there shouldn't be a gain.  Yet, Turbotax shows I have a gain of $23,784, because it calculates the adjusted cost basis as $176,400 + $10,686 - $59,870 = $127,216.  

How do I correct this?  And, how do I enter the original total purchase price (i.e. $218,000 purchase price + $4,800 closing cost)?

Thank you.

 

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