Capital Gain Calculations from rental home sale

[RegentSean]

Quick summary of my situation.  Bought a house in 2005 for $450k that was a primary residence.   The housing market crashed in 2008, and when we converted the house to a rental property in 2011 the value had declined to $300k.   Land value was $75k, so $225k was the basis I used to calculate depreciation.   Now, fast forward to 2023 we sold the property for $515k, and after commissions and fees netted $485k in the sale.    Trouble I'm having with TurboTax's calculation for capital gain is that it seems to basing it on my $300k fair market value estimate, with no consideration to the actual purchase price.   Total depreciation over the 12 years was roughly $100k, so I fully expected paying 25% of that back in recapture...but otherwise, the net capital gain should be pretty small at $35k.  

If I adjust the "cost" from $300k that was auto-populated (from prior FMV) to the original purchase cost + expenses, it brings things to a more expected number, but is that what I'm supposed to do to complete this correctly?   The "learn more" for "Cost" also has the mention of using FMV at time of conversion, so it's a little unclear.       

[Mike9241]

don't know what version you are using, but there may be lines in the asset section for the hone forms mode lines 29 and 30 where you enter your actual tax basis. There is no forms mode in the online version.

also ignore the wording on lines 29 and 30 line 3 should be line 4

[Carl]

In your case, you can't report this sale in the Rental Property (SCH E) section. You have to report it in the "Sale of Home (Gain or Loss) section instead. You will still be able to indicate business use, as well as recapture depreciation when reporting in that section. Just pay attention to the small print "on every screen" before you make any selections or enter any data.