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errafanan
New Member

House bought 7/6/05 and sold 8/8/19. Primary residence before and after rental period of 10 years. What period of time was it “unqualified use”?

 
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3 Replies
ColeenD3
Expert Alumni

House bought 7/6/05 and sold 8/8/19. Primary residence before and after rental period of 10 years. What period of time was it “unqualified use”?

It's easier to explain qualified use.

 

To qualify for the capital gains tax exclusion the property must have been your primary residence for at least 24 months of the last 60 months you owned it, counting backwards from the closing date on the HUD-1 statement you will receive at the closing when you sell it. The 24 months do not have to be consecutive. but they must all have been within the last 60 months you owned it.

 

You don't state the time periods when it was a rental and when it was your personal home, so it is impossible to answer your question.

Carl
Level 15

House bought 7/6/05 and sold 8/8/19. Primary residence before and after rental period of 10 years. What period of time was it “unqualified use”?

If the last occupant to move out of the house was a paying renter, then the house is still classified as rental property for 2019 (assuming the last renter moved out in 2019). Therefore you report the sale in the Rental & Royalty Income (SCH E) section of the program. Then the program will take care of all this *for you*.

If the last person to move out was you, and as the last occupant of the house it was your primary residence, then we need all the dates when you converted it from personal use, to rental, to personal use, to rental, etc.

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  2019". Select it. After you select the "I sold or otherwise disposed of this property in 2019" 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 its 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 your 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 2019" 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.

House bought 7/6/05 and sold 8/8/19. Primary residence before and after rental period of 10 years. What period of time was it “unqualified use”?

In your situation, the time period that is was NOT your Principal Residence (it was a rental) that happened AFTER December 31st, 2008 was Nonqualified Use.

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