I owned a house in TX that I rented for 6 months (Jan 16-Jun 16), at which point I put it on sale. I sold it in Aug. How do I handle this?

[jbtippett13]

Just trying to determine how to handle rental/house sale.  The amount I made on the sale falls well under $25,000. Im just trying to determine if I depreciate for the 6 months I rented etc

[CherylW]

First of all, you need to set up your house in Turbo Tax.  Go into the rental section and enter all the info, then check BOTH 2016 was the first year I rented this property and I sold or disposed of this property in 2016. 

On the next screen, put how many days it was rented, so the program allocates your expenses accordingly.  Continue your Property Profile till you get back to the Rental Summary. 

Enter the income and expenses for the entire time you rented your house. 

Now it's time to set up the house for depreciation.  The first questions are easy, type of asset, how you acquired it.   

Make sure you check The item was sold, retired, stolen, destroyed, disposed of, converted to personal use, traded in, or given away (or it's no longer being used in this business for some other reason) and put the date of sale. 

If you lived in the home any time at ALL, select I used this item for personal purposes before I started using it in this business.  Enter the date that you started using it for business, and then 100% for this year.   

Next you'll enter your sales information.  Use the blue Learn more to properly allocate your costs for the year. 

If you have entered everything correctly and allocated it properly, then Turbo Tax figures the gain/loss and takes it to the appropriate forms. 

[jbtippett13]

I guess I should have quantified further.  I purchased the house in Sep  2005, and used it as my primary residence until Jun of 2009.  At which point I put it up for rent, and rented it until the date mentioned above.  I have been depreciating it yearly since its been a rental property.  Are there any additional requirements other than the ones laid out above?

[CherylW]

No, as long as you've been depreciating it and have the correct disposal date so depreciation can be recaptured properly, Turbo Tax will handle all of that for you.  MAKE sure you put 100% for the business use for 2016.  Good luck!

[jbtippett13]

Also to further clarify I purchased this house when I was on active duty.  The reason I left the area was due to the fact I received orders moving me to another duty location.  When I entered information as you mention above it appears I am be charged capital gains. I am still an active reservist, and was under the assumption that I would not be charged capital gains due to being in the military.  Another response I found online had this question and answer

"It appears that I am paying capital gains tax on the sale of my home.  It was my understanding that this would be excluded.  We purchased the home in 2006 and began renting the home out in July 2012.  We sold the home in July 2015.  I am active duty military living in base housing currently.  It was my understanding that the sale of the home would not be taxable.
Recommended Answer

You have to sell as a personal home sale and mark "Military" for 'Other reason for sale"."  

If I am correct how would I then input correctly so that I do not end up paying the capital gain tax.  I want to account for all things correctly.