It depends on your rental activity during the year.
- Under the
rental section - if rented during 2016
- Under the
sale of business property - if not rented during 2016
Additionally, when
you sell a property that was used as a rental, you must pay 25 percent
recapture tax (also referred to as Section 1250 recapture) as well as regular
state income tax on the depreciation you claimed. (Remember the IRS will assume
that you claimed the correct amount of depreciation every year—this is true
regardless of whether you actually claimed any depreciation on your tax
return).
Click this link
for further information about reporting
the sale of a capital asset
To enter your rental sale under the rental section in
TurboTax Online or Desktop, please follow these steps:
- Once you are in your tax
return, click on the “Federal Taxes” tab ("Business" tab in
TurboTax Home & Business)
- Next click on “Wages &
Income” ("Business Income and Expense" in TurboTax
Home & Business)
- Next click on “I’ll choose
what I work on” (Jump to full list)
- Scroll down the screen until
to come to the section “Rental Properties and Royalties”
- Choose “Rental Properties and
Royalties” and select “start’ (or “update” is you have already worked on
this section)
- If your rental property is
listed, you will need to select "edit" to access this
information. Otherwise enter your rental property information. (If you are
entering your rental information for the first time, you will need to add
the rental house as an asset under step 16)
- Is This a Rental Property or
Royalty? - choose rental and put rental information and address
- What Type of Rental is This?
- choose rental type (ie: Single family (home or unit where a single
family lives))
- Do Any of These Situations
Apply to This Property? - select sold
- Was This Property Rented for
All of 2016? - answer questions based on your circumstances
- Property Ownership - select
your ownership percentage
- Indicate if you Actively
Participate - yes or no (If yes, this allows some of the passive losses to
be used against passive income)
- Did You Pay Anyone $600 or
More for Work Related to This Property? - yes or no
- Is Your Property in Any of
These Designated Areas? - Usually "none of the above"
- Review Your Rental Property
Rental Summary
- Select Sale of Property/
Depreciation section. Here is some additional information you will need to
select under the sale of property section:
- About 3 screens
in, if the house is listed under this section, you will select that you
want to edit this property
- About 4 screens more, check
box that you sold the property under "Tell us about this rental
asset"
- For the special handling
screen - say "no" (Please note that if you used FMV at the time
of conversion to a rental for your depreciation (as opposed to adjusted
basis), you will want to answer "yes" here and enter the sale
under the sale of business property section (see below).)
- Home Sale - select
"yes" if sale of main home.
- Sales Information - enter
the sales price information You will need to allocate the net sales
proceeds into asset sale and land sale. If your proceeds are not
allocated, you can use the same percentage of asset and land from the
original purchase for the sales proceeds allocation
To enter this rental sale under the sale of a business
property in TurboTax Online or Desktop, please follow these steps:
- Once you are in your tax
return, click on the “Business" tab ("Federal Taxes" tab in
Premier)
- Next click on “Business
Income and Expense" ("Wages and Income" tab in Premier)
- Next click on “I’ll choose
what I work on” (Jump to full list)
- Scroll down the screen until
to come to the section “Less Common Business Situations” ("Business
Items" in Premier)
- Choose “Sale of Business
Property” and select “start’
- Select "Sale of business
or rental property that you haven't already reported"
- Sale of Business or Rental
Property - yes
- Enter all the information
about your Rental Property Sale here
- Description -
address of property
- Date acquired - original
acquisition date
- Date sold - date of sale
(should be on 1099-S)
- Total sales price - total
sales price (should be listed on 1099-S)
- Cost of property (or tax
basis) plus expenses of sales - original cost plus any capital
improvements plus expenses of sales
- Depreciation taken on this
property - total depreciation taken property when rental (Please note the
IRS will assume that you have taken the correct depreciation on your
rental property while your property was available for rent regardless of
whether you have actually take it or not)
- What type of property is
this? - select - Rental estate that I took depreciation on.
- Installment sales - no if not
on installment sale
- 2 screens that show the
summary of what you have entered for your property sale
- Sale of Other Business
Property - Choose yes if any of these situation apply, otherwise choose
no.
- You sold property
that cannot be depreciated such as vacant land, mineral rights or
inventory
- You sold business or rental
property that you owed for one year or less
- You sold business or rental
property at a loss.
- Total Gross Proceeds - enter
your 1099-S sales information here (this could be the same amount that was
reported earlier as sales price)
