How to enter a sale of rental property (prior primary residence) when no other primary residence owned.

[svethome]

Sorry if this is repetitive question, but I find some conflicting information here.

I lived in my ONLY primary residence for 10 years, then moved out and turned the house into rental. I did not purchase another home. After 10 more years of renting it (I didn't live in my primary house at that time), I sold the house last year. 

Should I report in TT this sale as my primary residence or as a rental property?

Thank you in advance!

[DianeW777 · Accepted solution]

Report it as the sale of a rental property.  Based on the rules for any portion of gain, the home sale exclusion rules have not been met.

In general, to qualify for the Section 121 exclusion, you must meet both the ownership test and the use test. You're eligible for the exclusion if you have owned and used your home as your main home for a period aggregating at least two years out of the five years prior to its date of sale. You can meet the ownership and use tests during different 2-year periods. However, you must meet both tests during the 5-year period ending on the date of the sale. Generally, you're not eligible for the exclusion if you excluded the gain from the sale of another home during the two-year period prior to the sale of your home. Refer to Publication 523 for the complete eligibility requirements, limitations on the exclusion amount, and exceptions to the two-year rule.

Report the sale as a rental and inside the rental activity.  Here are the steps to do that and an example of how to breakdown the sales price and 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%

Multiply each percentage times the sales price/sales expenses to arrive at each individual sales price/sales expense.

You need to dispose of the property by telling TurboTax how and when it was disposed of.  Follow the instructions below.

1. Click on Income & Expenses
2. Under Your income and expenses, scroll down to
3. Rental properties and royalties, click Edit/Add
4. Do you want to review your rental?, click Yes
5. Under Rent and Royalty Summary, click Edit
6. Click Update to the right of Assets/Depreciation.
7. Do you want to go directly to your asset summary?, click Yes and Continue
8. Click Edit to the right of each asset to be disposed
9. Go through several screens until you get to Tell Us More About This Rental Asset
10. Click on This item was sold…….   And continue to answer the questions

You might also review information here.