How Do I report the sale of rental property

[MarilynG1]

If you didn't calculate depreciation on your Rental Property for the first year, when you set up your Rental in TurboTax, the correct depreciation was calculated for you based on the 'Date First Started Using for Business.'

Depreciation Recapture refers to when you sell your rental property.  All the depreciation taken over the years is subtracted from your original purchase price (plus improvements) to determine the Cost Basis for reporting the sale.

TurboTax calculates your Cost Basis (and Gain/Loss) figuring depreciation was claimed for all years as a rental (per IRS regulations).

Since you only missed claiming depreciation for one year, you probably don't want to file Form 3115 with your 2021 tax return.  It would have to be mailed and you would probably get an IRS letter, since you violated regulations by not claiming it in the first place. 

My advice would be just to report the sale in 2021 with the depreciation that TurboTax calculates for you. 

Click this link for more info on Form 3115. 

[jammin2020]

Any depreciation you claimed in past years just adds to the unrecapture section 1250 gains tax you owe in the year you sell the property. So filing the 3115 for 2017 would reduce you tax burden for 2017 but it would increase your burden for 2021 by the same amount. It wouldn't be worth the effort to amend your 2017 return since it doesn't change the total tax you owe between 2017 and 2021.

https://www.investopedia.com/terms/u/unrecaptured-1250-gain.asp

[luckyling]

Hello,

I sold my rental property in July 2021, I bought it in December 2009 and it was my primary home until it was rented out in October 2017 (basically during the past five years, it was our primary home for one year and 4 months). I reviewed this post thread and input all my information including the purchase date and sold date, but I was not asked to put the selling price. Could you please advise where to put the selling price? Will I be able to take advantage of the 2 out of 5-year rule (at least partially)?

BTW, I have been using Turbo tax software for many years, so the software can pull all my past years' tax returns from my computer. 

Thanks a lot!

[LeonardS]

To report the sale of your home in TurboTax follow these steps:

1. Log into your TurboTax account.
2. Select the Wages & Income tab.Scroll down to less common income select Show more.
3.  the line sale of home (gain or loss) select Start/Revisit
4. On the next screen Sale of Your Main Home select yes.
5. Follow the prompts to enter your sale information.
6. When you get to the page Sales Information you will enter the selling price in the box for Selling Price

@luckyling

[luckyling]

thanks

[luckyling]

Hello,

I have another question. What's the rental home sale capital gain rate? I checked the internet it says 15% for income less than $490k. My income is much less than this number (i.e. total income including the home sale gain), but the turbo tax show ~20% tax rate.  Is this correct?

Thanks

[LeonardS]

Yes, the 20% rate is probably correct.  The information you found on the internet may not be correct. The following chart is the 2021 capital gains rates based on filing status and income.  

 

[sks22]

Hello

@MarilynG1 

I am using Home/Business. I sold my rental home.   Purchased in 2003 as primary main home.  But converted to rental property in 2012.  Sold in Dec-2021.
In turbotax - (i) I have marked in the Property Profile, that this rental was sold in 2021.
(ii) Next when I am in the "Your property Assets" screen - I see my Assets listed correctly (e.g. Residence, Refinc fees, several prior improvements) are all there.  When it click "Edit" for each, I go thru a few screens -- including  where I can enter the Sale date, but never get the prompt to enter the Sale Price. 

I never get the specific screen, boxes to enter the sale data.

Please help!  Thank you so much in advance.

[sks22]

Hello  @Swaha155 

I am having the same issue.  I can see the list of Assets - and when I "Edit"  then, I can enter the sale date, but not the sale price.  

Were you able to get past this hurdle?

thanks

[MarilynG]

After you entered the Sale Date, you should get a screen to Confirm Prior Depreciation.

Say NO to the next screen 'Special Handling Required?'

Say NO to 'was this asset included in the sale of your main home?' 

The next screen will have blank fields to enter Asset Sales Price/Asset Sales Expenses (screenshot).

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

@sks22

[robertjones62215]

Hello,

I sold a rental property at a gain in 2023. Is Turbo Tax Deluxe ok or do I need Turbo Tax Premiere?

Thank you,

[DoninGA]

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@robertjones62215 wrote:

Hello,

I sold a rental property at a gain in 2023. Is Turbo Tax Deluxe ok or do I need Turbo Tax Premiere?

Thank you,

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If you are using the TurboTax desktop CD/Download editions, then the Deluxe edition can be used to report the rental property sale.  All the desktop editions include the same forms, schedules and worksheets.  You get more program help with the higher editions.

If you are using the TurboTax online editions, then you would have to use the Premium edition to report the rental property sale.