How to report sale of second home that was bought in 2010 for personal use, rented it from 2011 to 2014 taking depreciation, then used it personally until sold in 2017?

[twongxhmc]

only reported as a rental from 2011 to 2014.

[twongxhmc]

had another primary home during 2010 to current.  used second home for personal use when not rented.

[DS30 · Accepted solution]

Even though you currently use the home for personal use, since the house was formerly a rental property, you will need to enter the sale as the sale of a business property.

Additionally, when you sell a property that was used as a rental for a gain, you may need to pay 25 percent recapture tax (also referred to as Section 1250 recapture) as well as regular state income tax on the depreciation you claimed. (Remember the IRS will assume that you claimed the correct amount of depreciation every year—this is true regardless of whether you actually claimed any depreciation on your tax return).

To enter sale of business property in TurboTax, log into your tax return (for TurboTax Online sign-in, click Here and click on "Take me to my return") type "sale of business property" in the search bar then select "jump to sale of business property". TurboTax will guide you in entering this information. 

1. Select "Sale of business or rental property that you haven't already reported"
2. Enter all the information about your Rental Property Sale here
1. Description - address of property
2. Date acquired - original acquisition date
3. Date sold - date of sale (should be on 1099-S)
4. Total sales price - total sales price (should be listed on 1099-S)
5. Cost of property (or tax basis) plus expenses of sales - original cost plus any capital improvements plus expenses of sales
6. Depreciation taken on this property - total depreciation taken property when rental (Please note the IRS will assume that you have taken the correct depreciation on your rental property while your property was available for rent regardless of whether you have actually take it or not)
3. What type of property is this? - select - Rental estate that I took depreciation on.
4. Installment sales - no if not on installment sale
5. 2 screens that show the summary of what you have entered for your property sale
6. Sale of Other Business Property - Choose yes if any of these situation apply, otherwise choose no.
1. You sold property that cannot be depreciated such as vacant land, mineral rights or inventory
2. You sold business or rental property that you owed for one year or less
3. You sold business or rental property at a loss.
7. Total Gross Proceeds - enter your 1099-S sales information here (this could be the same amount that was reported earlier as sales price)