How report sale of rental property, where enter 1099-s?

[richeber]

I've spent at least an hour trying to figure this out without success, so thought I'd try here.

I did find one posting that tried to answer the question here: I sold my rental property. How do I report that? (intuit.com)

The instructions at that link state to check the "I sold or disposed of this property in 2021" box in order to accomplish the task. However if you click the "learn more" link next to that box the instructions state not to check the box if the disposition was to a related party which is the case for me (sold it to my daughter). So it's still a no go for me...

Also, another question to prove I'm a real novice and have been looking all over... It appears rental information can be entered in the "Investment Income" section, the "Rental Properties and Royalties" section, and the "Business Items (Sale of Business Property)" sections. How do I know which section I should be using?

Thank you in advance,

Rich

[ColeenD3]

Since it was a business property, enter it in Sales of Business Property. If you took a loss due to the related party sale, pay close attention to the instructions.

Special rules apply to sales to a related party and gifting of equity.

No loss deduction is allowed to a taxpayer when the transactions involve a related party or a gift of equity. This requires some math when entering the sale of business or rental property.

When entering either of these transactions into Sales of Business Property, you will have to make manual adjustments to the basis to prevent the loss from showing.  Keep these figures on hand as back-up for this adjustment.

1) Wages and Income

2) Other Business Situations

3) Sale of Business Property

4) Other Property Sales

5) Select Sales of Business or Rental Property that you haven't already reported

6)Choose No to the question, "Do all of the following apply to the property you sold?".

7)Choose Yes to the following screen that asks, "Do any of the following descriptions apply to the items you sold?".

8)Select the type of property from the drop down box.

9)Enter the information for your sale.

Example: You purchased the property for $250,000. The FMV is now $300,000. You sold it to a related party or gifted equity with a sales price of $200,000. The program as it stands would show the loss. You must decrease the basis to equal the sales price in order to not show the loss.

The new owner's basis is still $200,000, regardless of how you entered your sale in the program.

[Carl]

For starters, forget about the 1099-S. That's informational only, and the amount reported to you on the 1099-S is only the proceeds you were paid at the closing. It usually does not include all of your gain that may be taxable. Note that there is nowhere to enter the 1099-S either, since the form is informational only.

Here's the general guidance.

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 have a selection on it for "I sold or otherwise disposed of this property in  2021". Select it. After you select the "I sold or otherwise disposed of this property in 2021" 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 if it's zero. Then you MUST work through the "Sale of Property/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 on some assets. Likewise, if you sold at a loss then you must show a loss on all assets, even if that loss is $1 on some assets.

Basically, when working through an asset you select the option for "I stopped using this asset in 2021" 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.

[richeber]

Thank you for the quick response. The advice to forget about the 1099-s helps a lot as I've been fixated on entering it somewhere because I felt it must be a requirement. Sounds like I can ignore the text within the turbotax program since it specifically states not to check the "I sold or otherwise disposed..." box if the sale was to a related party (as originally noted). I'll trying doing that in the next few days because I'm at the point I'll try anything. I thought I tried it before and was still never asked about a sales price but I'll give it another shot. Thank you.

As an aside, I never lived in the house and don't have any other associated expenses/assets, just simply rented the place to my daughter and then sold it to her.

[LeonardS]

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

1. With your return open in TurboTax, search for rentals and then select the Jump to link in the search result.
2. Answer Yes to the question Did you have any income from rentals or royalties?
3. When you get to What are you here to report? select Rental property and fill out the description, address, and owner.
4. When you hit Tell us about your situation this year check the Sold box along with any other boxes that may apply.
5. Continue following the onscreen prompts to enter info about your rental property. Eventually, you'll get to the Review your rental property info screen. You can report the sale in the Expenses/Assets (Depreciation) section, along with any other pertinent info (like income and expenses)

This TurboTax link I sold my rental property. How do I report that? has information that you may find helpful. 

@richeber

[richeber]

Not sure if it's because we're using different editions of turbotax or it's because I previously started entering rental data, or something else, but the text of the questions aren't lining up exactly. They seem similar but since the subject is a little over my head I'm not sure if a subtle difference could be relevant or not. For example, when I "Jump to" rentals I'm never asked "What are you here to report?". I am asked if I want to review my rental and royalty information (I click yes), then I confirm I'm not a real estate professional (click none of the above), and then click "edit" on the property I previously entered. 

From there I clicked "update" next to the "property profile" section and worked through that info ensuring that I clicked the "I sold or disposed of this property in 2021".  (And I feel compelled to point out once again that the "Learn More" link next to that box specifically says not to do that if the disposition was to a related party which mine as noted in the original post.)

This time around when working through the "sale of property/depreciation" section I noted that I "stopped using" all the assets in 2021 as suggested in anther reply to my post (something I failed to do before).  I only have two assets listed, some air conditioners and the rental unit itself. 

Is that all I need to do? It seems really weird/counterintuitive that I'm never prompted for how much I sold the rental for. Hypothetically if I sold it for $1M more than I paid for it I haven't entered that info anywhere which doesn't make sense to me since I'm confident uncle sam would want to tax any profit I made.

[richeber]

My bad, I'm going through it again and it is asking me for a sale price which I need to split up between the land and asset value. That makes more sense to me. Thank you.

[azuniga]

one question i have it when , we enter the ASSET for the rental property sold (to my mom) for $1.00. Do we enter the amount we bought it like 15years ago and the day purchased or that's the date we sold it. 

[JamesG1]

You may report the sale as $1 unless you have an IRS Form 1099-S reporting a different sales price.

Cost of sale would be the price that you paid for the property plus the cost of any capitalized improvements (replacement roof, water heater, remodel costs).

Date of purchase would be the date of closing of the purchase.

Date of sale is the date of closing of the sale.

When you sell a rental, in addition to capital gains, you may have Depreciation Recapture. If you dispose of depreciable or amortizable property at a gain, you may have to treat all or part of the gain (even if otherwise nontaxable) as ordinary income.

To report the sale, follow these steps:

1. With your return open in TurboTax, search for rentals and then select the Jump to link in the search result.
2. Answer Yes to the question Did you have any income from rentals or royalties?
3. When you get to What are you here to report? select Rental property and fill out the description, address, and owner.
4. When you hit Tell us about your situation this year check the Sold box along with any other boxes that may apply.
5. Continue following the onscreen prompts to enter info about your rental property. Eventually, you'll get to the Review your rental property info screen. You can report the sale in the Expenses/Assets (Depreciation) section, along with any other pertinent info (like income and expenses)

[azuniga]

im a still a little confused. since we sold it this pass year. again (sold it to my MOM) for $1.00

Cost of sale would be the price that you paid for the property plus the cost of any capitalized improvements (replacement roof, water heater, remodel costs).

• this date would be from back in 2007
• or
• the date we sold it to my MOM in 2021

Date of purchase would be the date of closing of the purchase.

• date of closed back in 2007
• or
• last year 2021

Date of sale is the date of closing of the sale.

• the day the deal was closed in 2021 to my mom

[MarilynG1]

Had you previously been reporting Rental Income and Expenses on this property?

If so, you would have set up the property in the Asset section with a 'Cost Basis' (what you originally paid for it plus improvements added before renting) and been getting a depreciation deduction every year on Schedule E.

When you sell it, your Gain or Loss is determined by what you sold it for, less the remaining undepreciated value (Cost Basis), plus sales expenses (Cost of Sale).  Any improvements you made to the property while it was a rental would have been added as depreciable rental  assets (along with the house).  Any improvements you made before it was a rental are added to the Cost Basis when you set it up as a Rental.  

For example, you set up a Rental Property in 2015 with a Cost Basis of 100K (you paid 75K for it and added 25K improvements before renting it).  You sold it in 2021.  Since you've been depreciating it for five years, the Cost Basis of the property is now 80K (TurboTax figures the depreciation out for you).  

If you sold if for $1 and had 5K in Sales Expenses, you have a loss of $84,999 ($1 Sale Price, minus 80K Cost Basis, minus 5K Sales Expenses).  Sales Expenses for selling your property include sales commissions, advertising, broker and legal fees, and transfer taxes. 

If you haven't been reporting Rental Income/Expenses, you could report it as a Sale of a Second Home in TurboTax. 

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

Here's more info on Selling Rental Real Estate at a Loss.

@azuniga

[Glski]

I have the same issue....  Sold my rental, and Not seeing where to report sale price.....  Help!

[Vanessa A]

To enter the sale of your rental  click the following:

• Federal
• Income and Expenses
• Show more next to Rentals, Royalties and Farm
• Start next to Income and  Rental
• You will walk through the asset section, adding the property if it is not already added. 
• follow the steps until you can answer that you sold the property
• continue through to enter the sales price and expenses. 

[zenmster]

don't you have to enter the sale of the property and related expenses as part of the depreciation entry boxes too? I'm using desktop TT2021 for mac home & biz btw. 

I did this based on a post in 2019 but it's scary since after I entered my realtor fees of $15000, my refund amt went DOWN...: O 

https://ttlc.intuit.com/community/tax-credits-deductions/discussion/where-do-i-report-real-estate-ag...

[zenmster]

and "asset" vs "land value" is say:

1. if my asset is $10

2. my land is $2

then I would break out sales price and any expenses 20% assigned to land expenses and 80% assigned to asset expenses or sales price?