Im praying someone can guide me on this - my husband sold his rental property last year & we received the 1099-S for the sale. I am trying to file taxes for it but am confused as to exactly what must be filed it addition to the 1099-S. The IRS website shows I should also file a form 4797? Also the cost basis is confusing. He bought this property in 2009 for $103,500 but refinanced it in 2014 so not sure if that will play into it. Before selling the home we did do improvements like new roof $5k & painting exterior/interior for roughly $4,300.00. Im not sure where is a good place to start. I greatly appreciate anyones help & direction. Thank you kindly in advance & have a blessed evening 🙂
Best advice would be to NOT try this yourself ... seek local professional assistance. If you still want to try it yourself then upgrade to the Premier LIVE option for one on one assistance and the review service.
The 1099-S shows the cash you were paid at the closing. It *DOES* *NOT* mean that cash is your correct taxable gain. Your taxable gain could be higher or lower than what is shown on the 1099-S.
Reporting the sale of rental property in the TurboTax program is not that difficult if you have been using TurboTax in prior years to report your rental income and expenses. But I question that since my screen shows you're using the online version of TurboTax free, which flat out can not be used to report *ANYTHING* concerning rental property. With the online version you must be using at least Premier.
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.