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vrenting
Level 2

Capital Gains on Rental Property calculation

In 2015 we purchased a rental property in a Partnership LLC for $870k.  We did a 1031 exchange for 2 rental properties that netted a deferred gain of ~$233k.  ( Basis for new home $637k).   We sold the home in 2020 using the new basis for the home at $637k + $40k of improvements or $677k.     We sold the home for $1.2m, and Turbotax is calculating the gain what I believe is too high.  I cannot find in the program or calculation sheets where this is being calculated.  The screen basically shows the adjusted basis of $677k + depr of $70k ( reclassified to ordinary income) and the sales price = $850k gain???  The screen basically shows this:

Sales Price: $1,215,000

Adj basis $677,000

Depr  _70,000

Gain $858K.

Now this math makes no sense to me at all. I can manually override form 4797, but cannot figure out where the $858k gain is coming from.  My math says it should be $608K.  

Any help is appreciated. 

5 Replies
tagteam
Level 15

Capital Gains on Rental Property calculation

Have you checked all of the relevant forms in Forms Mode?

 

The math appears to be close if the deferred gain is taken into account.

vrenting
Level 2

Capital Gains on Rental Property calculation

Yes. The 8825 worksheet is where the calcs are and I cannot follow it. The deferred gain is $233k. The home was $807k.  The adjusted basis shows accurately at $807-$233. it appears to be doubling the gain.  

vrenting
Level 2

Capital Gains on Rental Property calculation

Correction, the home is $870.

tagteam
Level 15

Capital Gains on Rental Property calculation

It is rather difficult to troubleshoot this scenario on a platform such as this one.

 

Unless you entered the transaction twice (for example, once in the Rentals section and again in the Sale of Business Property section) there appears to be no reasonable explanation for the gain to have doubled, absent some other entry or program error.

 

As a result, I suggest that you contact Support via the link below.

 

What is the TurboTax phone number? (intuit.com)

vrenting
Level 2

Capital Gains on Rental Property calculation

Thank you!  I was able to find out where the "error was".  It was being calculated incorrectly on Assets worksheet.  As I worked through that it cleared up.  Every is flowing through accurately now.

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