How Do I report the sale of rental property

[DianeW777]

You need to dispose of the property by telling the software how and when it was disposed of.  Follow these directions.

• Down the left side, click Federal
• Click on Income & Expenses
• Under Your income and expenses, scroll down to
• Rental properties and royalties, click Edit/Add
• Do you want to review your rental?, click Yes
• Under Rent and Royalty Summary, click Edit
• Click Update to the right of Assets/Depreciation.
• Do you want to go directly to your asset summary?, click Yes and Continue
• Click Edit to the right of the assets to be disposed
• Go through several screens until you get to Tell Us More About This Rental Asset
• Click on This item was sold…….
• And continue to answer the questions

See also here.

[akruse68]

This instruction does not work.  I follow the prompts and it never asks me to enter the sales information on the rental property.

"You can report the sale in the Expenses/Assets (Depreciation) section, along with any other pertinent info (like income and expenses)"

Where do I report the sale?

[MarilynG1]

Click this link for instructions on How to Report Sale of Rental Property.

Basically, there are two sections in the Rental topic where you enter sale info.  In Property Profile, you indicate the property was sold.

In the Assets/Depreciation section, you enter the Sales Info.  The Rental must be listed as an Asset here to do this. 

If you sold the property in 2021, say YES it was rented all year (which means up to the sale date), unless it was not rented at all in 2021. 

If you need more help, post again and we will try to help.  Remember, we can't see your return in this forum. 

[Swaha155]

Please help................my home is not listed as an asset, so how do I report the amount of the home sale to figure out Capital Gains??  I am using TurboTax Home & Business 2021.

[JamesG1]

If you sold your primary residence and lived in and owned the home for at least two years in the five year period before the date of sale, you can exclude up to $250,000 of gain.

Follow these steps to report the sale: 

• Across the top of the screen, click on Federal Taxes.
• At the top of the screen click on Wages & income.
• Click I'll choose what I work on.
• Scroll down to Less Common Income.
• Click Start / Revisit / Update to the right of Sale of Home.
• At the screen Sale of Your Main Home, click Yes.

You can also click on the magnifying glass in the upper right hand corner of the screen and enter ‘sale of home’.  Then click on ‘jump to sale of home’.

The software will walk you through questions to report the sale of your personal home, income and expenses.

See also this Best Answer.

[Swaha155]

Thank you, but it was not our primary residence, it was a rental property.  How would I handle that?  I clicked the box that it was sold, but no where does it ask the sales price.  Should I list it on the asset page?  Currently it is not on there, only furnishings, etc.

[DianeW777]

Yes, you should list the rental home itself as an asset in your rental activity. Be sure to enter the date you first placed this rental property in service for rental use.

Be prepared to enter both the building and the land portion of the cost. Once you enter this you will be asked if it was sold or disposed of and TurboTax will lead you the rest of the way through the sale. 

• Usually you can use the tax assessment to determine the percentage of the cost that applies to land and building.

Depreciation is considered used, even if you did not previously enter the rental home on your tax return. This means that it will reduce your cost basis before calculating the taxable gain on the sale. If it has not been fully depreciated and you did not take advantage of the depreciation in the past, you may be able to amend tax returns for 2018, 2019 and 2020.  For 2018, it must be completed before April 15th.

If you other assets such as furnishings are also gone with the home, be sure to mark them sold.  You can enter zero for the sales price if you are entering the entire proceeds in the home and land, if applicable.

Here is an example of how to figure out your selling price for each.

Use the original cost of each asset listed on depreciation (all belongs to house B now) add those together then divide each one by the combined total to find the percentage of the cost for each asset.  Use that percentage times the sales price and sales expenses to find the selling price/sales expenses for each asset.

Example:  Original Cost (of each asset on your depreciation schedule)

$10,000 Land                = 13.33% 

$50,000 House              = 66.67%

$15,000 Improvements  = 20%

$75,000 Total                 = 100%

[Swaha155]

Thank you very much!  When I enter the land and building costs, do I include the cost of the land in the home (building) price from our HUD, or break it down so that the home cost excludes the land cost?  That way both total to equal the sales price.

[JamesG1]

@Swaha155

Your HUD statement identifies specific selling prices for the land and the building and improvements?  Please clarify.

If your HUD statement breaks down the selling price of the land from the selling price of the building and improvements, use the numbers on the HUD statement.

If you reported the separate cost basis for (1) the land and (2) the building and improvements, then you report the the sales price and the cost of sales for both (1) the land and (2) the building and improvements at the screen Sales Information.

The sale of the rental property is a sale of two assets, (1) the land and (2) the structure and improvements built on the land.  The land cannot be depreciated, the structure and the improvements can be depreciated.

See also this help.

[Swaha155]

No the HUD does not have a breakdown.  My question was do I use the sales price on the HUD as the home cost and then also put the land value on the land line, so the addition of those two numbers would be above the sales price?  OR, do I reduce the home cost by the land value so that when the two numbers are added, the total equals the sales price on the HUD?

Also, I realized that I never depreciated the home!!!  An advisor on my thread said I could amend the past 3 tax returns, but I believe I'd have to file 1 3115 to change the accounting method, which would likely be a nightmare.  Is it best just to let that go and eat the loss?

[DianeW777]

You should use the example and separate out the land sale price and the building sale price and do the same for the sales expenses.  TurboTax will ask you for both.

Form 3115 Instruction: By including this with the current year tax return, you can complete everything on the 2021 tax return.

1. Adopt a change in accounting method: This option allows you to go back as far as you need. Make the adjustment on your current year tax return to expense the missing depreciation.
   • Why am I adopting a change in accounting method? Not claiming depreciation in two or more years indicates that you've chosen an accounting method without depreciation. In this case, you must now elect to change your accounting method to include depreciation.
2. You must use the TurboTax CD/Download version to complete this form. TurboTax does not help you with this form. And your return must be mailed because this form is not supported through e-file.

This must be completed and filed with the return on time.

[Cbjiang]

You need to upgrade your TurboTax with rentals and business. In this version, under Business, in the very last line, there is a Sale of Business Property 

[chitownbee00]

I have the same situation.  I did not claim depreciation for 2017 only, but claimed for 2018, 2019,2020 and I sold the property in 2021.  I am planning on filing form 3115 for 2017.  also I am planning on using Turbotax Live this year, so I could get some tax guidance.  What I read about filing daunting 3115, I can not use Turbotax online and I have do it through TT desktop/CD, in which case

i won't be able to use TTLive Premier.  

Could you please advise me the best scenario/product for me to use this year as I sold my rental property and also purchased a Plug-in vehicle for which I can get federal credit?  I really want to use a TT tax live as well

Thanks in advance

[DaveF1006]

To clarify, why are you submitting a Form 3115? 

[chitownbee00]

hello

I did not claim depreciation for the first year when the property was placed for rental.  I used TAXACT software and it did not calculate depreciation like how TT does.  But I used TT for later years and I sold the property in 2021.  After reading the internet posts about recapturing missed depreciation for the past years, I learnt that filing form 3115 is the best way to achieve it.    But my situation does not fall into 2-year rule for form 3135.  Could you please suggest the best way to accomplish this??