I sold a vacation home in 2018 that we rented to others for income. What factors determine if I enter this under Personal Investment or sale of Business property?

[LinaJ2018 · Accepted solution]

If you rented your place to a person at the fair rental price and rented for more than 14 days during the year, you are considered renting out as a business.  By selling it, you will report it as a sale of business property on a Form 4797.

If you charged a rent under the fair rental price or rented for less than 14 days, it is not considered as a rental business. You will report it as a sale of a personal investment. 

[Hazel]

I didn't rent my second home in 2018, but I did rent it out and take depreciation (about $900) in 2016. I sold the home in 2018. The Turbotax interface is giving me conflicting directions on where to report the sale in the interface. When I started to report it as a sale of a second home, Turbo asked if I had *ever* rented it out. Yes. So Turbo said to report it as a sale of a business asset instead. I did that, but at the end of the process when Turbo checks for errors, it says I shouldn't have a schedule E (because I rented 0 days in 2018). Turbotax has a hard time dealing with anything out of the ordinary. Not sure what to do here. Can I just delete schedule E? Looks like the sale is on a 4797, which does reduce my cost basis by the $900 depreciation.

[Lonny]

I have the same exact quandary.  It's been a vacation rental property for years but was sold in 2018 before there were any rentals, so TT forces me to delete it as a rental, then when I try to sell it as a second home, it asks if it **ever** was a rental and TT starts chasing its tail.

Will someone Please answer where to enter a Sched E rental for years with $0 rent in the year of sale?

[Carl]

Generally, real estate that is utilized to produce income is a business property sale. That would be things like rental property, as well as raw land if you ever rented out that land to someone else for their use. One example of the latter would be raw land that you rented out to an individual and they used it for placing a storage shed on.

Real estate that is held and not sold until it's value increases would be an investment. A flip would also fall into the investment category. For example, if you purchased a house then fixed it up and sold it, that would be termed as a flip. It's also an investment because it wasn't used to actually "produce" income during the period of time you owned it. So it's a sale of an investment.

[tagteam]

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@Lonny wrote:

before there were any rentals, so TT forces me to delete it as a rental.....

Will someone Please answer where to enter a Sched E rental for years with $0 rent in the year of sale?

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I think your issue could be that you are checking the box on a screen in the rental section (see screenshot below). If the property was not rented but available for rent, do not check that box.