Form 4797 Sold a rental property

c_wone · ‎June 4, 2019

I purchased a premire Turbo Tax 2015 and sold my rental property. However, I couldn't find a entry to put for example,
Sold my house gross $406,000. Loan amount was $200,000. Purchased property @ $345,000. So, bottom line is that I only gained ~$39,000. In the Form 4797, it said my total gain ~$200,000. But in reality I didn't gain that much. Where do I enter the loan amount so a net gain will be ~$39,000?

Carl · ‎June 4, 2019

Where in the program did you report the sale? Was it still classified as a rental at the time you sold it? If so, here's how it's supposed to be reported, so that everything works out.

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 ahve a selection on it for "I sold or otherwise disposed of this property in 2015". Select it. After you select the "I sold or otherwise disposed of this property in 2015" 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 it's 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 our 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 2015" 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.

earevak · ‎June 4, 2019

Hello Carl. I understand all the steps that you are mentioning. I have a similar situation than OP. Are selling costs added to the cost basis?? I can't find any information on it. Also, Do you still need to fill the form 4797? Every time that I research for rental property on the internet they said I need to fill this form and this is under another income section> Sell of a business property. Any help will be appreciated!! Thank you!