How to split reporting rental property

[Jren25]

Situation: owned with wife (50/50) three rental properties. One was sold in 2024. The other 2 are still active. Plan to file separately this year. How do we treat the sale of the rental and reporting tracking of the other 2. TT has been tracking the information in the joint return, how do we transfer the information to the two new MFS returns/accounts? Also the home that was sold was primary home, how do we report the sale and how do we treat the recapture? Do we have to split in half and report in both returns?

[RobertB4444]

Since you owned it 50/50 then you would just report it half on each tax return.  It won't make a difference whether or not you're in a community property state.  

You can convert the return that you have been filing over to a married filing separate return for one of you.  The other will have to start all over and enter the data as though it were brand new.

And you will need to change the ownership percentage to 50% on all of the rentals and properties that you enter and then when you enter the full expenses TurboTax will cut them in half for you.

If the house that was sold was a rental when it was sold then you will enter the sale through the rental real estate section of TurboTax.  If it had been converted to a personal residence then you will enter it through the "Sale of Home" section under "Less Common Income" at the bottom of the income section of your federal return.  

If you're entering it in the rental section the depreciation recapture is handled by the software.  If you're entering it into the sale of home section you will need to enter the amount of depreciation that the property had accumulated when you converted it from a rental.

@Jren25 

[Jren25]

@RobertB4444 Thanks for the information. The rental that was sold was primary residence 2 out of last 5 years. So it qualifies for the main home exclusion. How do I enter that in the rental section? 

Another related question. After selling this rental (4 months after) we also sold our primary home, for this one we lived there less than a year but we sold due to job relocation (more than 55 miles), so I think it qualifies for partial exclusion. How do I handle these two "main home" sales on same year (2024).?

[RobertB4444]

When you're entering the sale into the rental section you will be asked questions about the use of the home.  Two years out of the last five qualifies for a partial exclusion.  The system will walk you through that.

The other home sale should also qualify for a partial exclusion.  Enter all of the dates and there will be questions about moving and whatnot.  The system is set up for that as well.

@Jren25