How to figure business portion of sale and sale expenses of rental property with minor personal use?

[reluctant-taxman]

In 2020 we sold a rental property that we occasionally used for personal purposes.  Turbotax is asking for the business portion of the sale price and sale expenses both for the asset (improvement-house) and land.   How do we figure these numbers for our situation which is as follows:  100% business use (rented) for 2007-2013, 0% business use for 2014 (it was vacant, we did repairs, and not claimed on our return for that year), 2015 (58%

 business use), 2016 (82% business) ..the 2015 and 2016 percentages were from FMV rental/personal use....Not claimed on 2017 return, brought back in to 2018, 2019 and 2020 at 100% rental use each year then sold in late 2020.  So overall predominantly rented with a little personal use.  We sold it for about the same as we bought it for, there would actually be a loss except for the basis being reduced by depreciation taken so there will actually be a taxable gain on the sale.  Can we just assume that business portion of sale price and selling expenses are 100%? If not what is the idea for apportioning Business percentage for the sale?  We had no appraisals or indication of property value fluctuations for the two years not filed as rental property.  The only records would be property tax assessments for each year which kept gradually increasing. thanks

[ColeenD3]

Yes, your depreciation should be calculated for you so that is the biggest problem. Your personal use related to the rental aspect of it, not the sale in your case. It would be different if you lived for 2 out of the past 5 years as your personal home. In your case the sales expenses are 100% business, as you are recording the entire gain on Sale of Business Property.

[reluctant-taxman]

Thanks. I understand all about allocation of personal/business expenses as we have had small amounts of personal use over the years.  However when I get into the questions about the sale, the  program is actually asking for business use portion of the selling price and selling expenses (closing costs).   I havent gone down that path yet, it is what I am trying to understand.  So for example given the numbers I gave in my original post, it seems like I would take the % of business use from each of the 14 years returns and divide this by the total use and then use this percentage to allocate amount of sale price and sale expenses to business use. Simplifying as an example suppose one had a property for 5 years where 4 years were 100% business use and one year was 90% business use ...total use is 5 x 100% = 500, business use is 4 x 100 + 1 x 90 = 490, ratio would be 490/500 or 0.98 .  Allocate 98% of sale price and sale expenses to form 4797 and 2% of sale price and sale expenses somewhere else on the personal side. One would think that the gain is going to be the same but there must be some reason to do this related to deducting business losses having different rules than personal losses. In our case we have a gain because of having sold the property about what we paid but having taken enough depreciation to make sale an overall gain in 2020 tax year.  Can you verify whether I am on the right track with this thinking, thanks. 

[SForrestLO]

For further assistance, you can speak with an expert. This Turbo Tax FAQ will provide more information.

What is Turbo Tax Live?

[reluctant-taxman]

Not using TT online, but thank you for the suggestion. 

[reluctant-taxman]

I will put the sale down as all business, if IRS wants to tell me different I guess I'll find out.