Buying and Selling Rental Real Estate Same Year

Forum|Forum|3 years ago
January 3, 2023
9 replies
84 views

I bought a house in Aug, 2022, to rent out. I instead chose to fix/flip. I sold in Dec, 2022. TT Home and Biz is calculating depreciation. I'm sure I can't take depreciation, since it's the same year purchase/sale. Is that a problem?

TurboTax Home & Biz Windows

Carl

Level 11

Where are you reporting the acquisition/sale of this property? Hopefully not on SCH E since you never rented it out.

leisurelarAuthor

Level 2

I have a few rentals. This is the first I've ever bought/sold in the same year. In TT H&B, I entered as an asset. It asks if I purchased and when. It asks if I sold. I enter that info. I believe it does automatically go to a Sched E. I didn't choose which form(s). TT does that.

Carl

Level 11

If you never rented the property, you will not report this in the SCH E section. It's not a rental property and never was while you owned it. You'll report the sale of this property in the Investments section. Since you had it for less than a year, it's a short term investment and you'll pay the higher short term investment gains tax on any gain realized.

Make sure you delete this specific property from the Rental & Royalty Income (SCH E) section of the program. Then report it in the Investments section.

Anonymous_

Level 15

@leisurelar wrote:

I'm sure I can't take depreciation, since it's the same year purchase/sale. Is that a problem?

TurboTax is handling this scenario properly since the asset is depreciable real estate (Section 1250 property).

As has been mentioned, if you do not want depreciation calculated, enter the transaction as the sale of investment property.

Carl

Level 11

@Anonymous_ my interpretation of this thread is that there was never an attempt to rent out the property. So that's why it would be reported in the Investments section, and not on SCH E.