The property was purchased in 1992, all deprec/amort was calculated by TT since then. No rent was collected in 2018, it sold in Feb. 2018. The sales figures are all on the settlement documentation (ALTA Settlement Statement - Combined). Not a HUD form. Original purchase price was $92K, selling price $141K but there have been many expenses along the way, all recorded in TurboTax and depreciated with the automatically selected schedules. There was one post sale expense when a problem turned up.
In the interview I entered that the property was sold, and no rent collected, and TT deleted the rental entry! So I can't even look at the old data in the program, although I have the old returns. If I delete the return and start over, is there some way to get TT to import the relevant information and move it to the sale of business property and into the correct forms?
Simply put, how do I use TT H & B to create my tax return in this situation? Is there a document available? What is the workflow? Do I have to go back to all my old returns and if so, what numbers do I use and how?
Seeing that it appears you did everything right, start to finish with the tax reporting over the years, this will be a piece of cake to report the sale. You only missed one thing and as far as I can tell, it's a program fluke. While you will report zero rental income for 2018, you *MUST* indicate that it was rented for "at least" one day. Otherwise, the SCH E gets deleted and you get the "wonderful" opportunity of deleting the .tax2018 file in your documents/turbotax directory and starting over. (That's the only way to re-import the data you deleted against your will)
You probably don't need to below guidance, but I'm providing it anyway in case you're not aware the TTX program "can" have issues with the SCH D if you're not aware of the below.
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 2018". Select it. After you select the "I sold or otherwise disposed of this property in 2018" 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 2018" 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.
Tenant rent period runs from the 2nd day of the month, through the first day of the next month. So they pay the month's rent on Dec 2nd. The last day they can occupy the house will be Jan 1 of the following year. So it's rented for one single day in 2018 with no rental income reported in 2018, because that one day was included in the month's rent that was paid on Dec 2 in the prior year.
That's just the analogy. I don't know anyone who has a renter move out and then closes on the sale within 30 days. Not impossible of course. But extremely rare.
"Maybe Inuit should give us a free copy of next year's software! "
ha ha ha! Many who have never owned or ran their own business seem to have this mistaken impression that a business is "in business" to serve their needs or provide a product or service. While that may be one of many reasons a business exists, there's only one root reason why any business is created in the first places.... "to make a profit" and that's it. If the business doesn't make profit, it lays off all employees and closes the doors.
I do find it humorous at times with some of my clients (I do networking) who think doctors and dentists are carrying all that money in wheelbarrows to the back room and dumping it in the safe. It's not at all uncommon for a medical professional to gross $100,000 a month without even trying. But what folks don't take into account is that the doctor or dentist has to pay their overhead out of that. I've done work for doctors who didn't collect their own paycheck for a month, because after paying all the bills for the month (utilities, employee payroll, drug costs, etc.) there wasn't a dime left.
I am now working through the asset list, which is annoyingly long, and have a couple questions.
1) You said: "Then if you sold this rental at a gain, you must show a gain on all assets, even if that gain is $1. " Why is that? I can do it by reducing the selling price of the primary asset, the house, by the undepreciated value of the other assets. But what is the problem with just leaving the value in the house and putting the value of the asset at 0, which would make it a loss and I would think, subtract off the total?
2) I had a refinance cost in the list as an intangible asset, which has no depreciation. What is the correct way to handle that?
BTW, I couldn't have done this without your help.
2 - I don't think you mean intangible asset. the correct term for your refi costs is "amortized asset". Remember, capitalized assets are depreciated over time and that depreciation is recaptured upon sale. Whereas an amortized asset is not depreciated - it is deducted over time and there is no recapture. Basically, if you have "in fact" correctly classified those refi fees as an amortized asset, then if they're not already fully deducted, the program will deduct the remaining balance "for you". The trick is, when working through the asset you'll select YES on the "Special Handling Required" screen, so that you're not prompted for sales information on the amortized asset.