Double click to Link sale to Home Sale wks

[DoctorJJ]

I sold a rental property (house and land) that I used to live in as my personal residence before the rental. I am eligible for a partial home sales tax exclusion ($50K, for illustration purpose). TurboTax (TT) keeps erroring out with "Double click to Link sale to Home Sale wks". It seems that TT does not like that I have a loss on the house part (-$10K, for illustration purpose) of the sale, even though I have a gain (+$40K, for illustration purpose) on the land part of the sale. TT wants me to delete the link to Home Sale wks. When I delete the link to Home Sale wks, my tax burden explodes since, I think, TT removes the partial home sale tax exclusion that is in the Home Sale wks. I think I should be allowed the partial home sale tax exclusion on the difference between the gain of the land part and the house loss part,  yielding a net gain of $30K ( $40K - $10K).  If my total depreciation is $20K, then, I think of the $30K net gain, $20K would go to depreciation recapture and $10K toward my partial home sale tax exclusion (I understand that the rest of the partial home sales exclusion of $40K ($50K - $10K) would evaporate).  This means that I should owe tax on $20K, not $30K which TT tries to do. Any help is appreciated in resolving this "Double click to Link sale to Home Sale wks" error while maintaining my home sale exclusion. (Note: Assume that income is such that I will have to pay taxes).

[ColeenD3]

You said you want to exclude the gain, but you also said, "I have a loss on the house part (-$10K,". You can't have both a loss and a gain. You can't ake a personal loss on your home. For the rental portion, you must separate land as it is not depreciable. For the personal portion, it is all one sale.

[DoctorJJ]

It is entirely possible to have a loss in one part (in this case, house part) and a gain in another part (in this case, land part) because when one enters the sale of a rental property in TurboTax (TT), one needs to separate the sale price of the house and the sale price of the land. These sale prices are then subtracted from the corresponding acquisition price (or price when asset was put into rental service). What I need help with is how to resolve the error on TT that wants me to remove the link to Home Sale worksheet because there is loss on the house part. If I do remove the link, my tax burden skyrockets since removing the link gets rid of the partial home sale exclusion which TT correctly computed. Any suggestion for someone who has been through this successfully?

[ColeenD3]

While in the rental section, you must separate the land from the building, it is because you can't depreciate land. You do not have the same restriction when you sell your home. Add the land to the building and treat it as one single property, the same way you would had it never been a rental.

[DoctorJJ]

I do not quite understand the answer. I am talking about a rental property sale, where I have some partial home sales tax exclusion. TurboTax (TT) requires separate entries for land and house. Are you saying that I should add the house and land parts and put that as one entry? But, when the property was put into service, I had to break down the value into land and house values into TT. I think this allows TT to determine land gain and house gain. Please, elaborate on your approach.

[AmyC]

When you are in the rental house section, going through the house asset, you should have marked that you used the item for personal purposes before using it for this business. Was the asset included in sale of your main home, select no. Enter sales information. Personal residence since 1997? select Yes

[AmeliesUncle]

I would just reallocate the sales price, so it shows a gain for both house and land.

Because you are reporting it as your Principal Residence, TurboTax will just combined them anyways and report it on Form 8949/Schedule D (which is wrong, but that is another discussion).