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Planning to Sell my Rental Property in 2022

I am planning to sell my rental property in 2022 and want to understand things i should be considering. I have not lived in this property since 2015 and rented since then. 

- How do i calculate the Tax?

- Can Capital gain in this sale balanced with other Capital losses (say if i gain 10k in this property sale substituted with 10k capital loss in stocks?)

- Can I claim the $500k married joint exclusion ( if we are submitting tax return joints and property is on both of us and neither of us lived their since 2015)

- Can i talk to anyone (CPA) in Turbotax in this regard as i probably applying my returns in here?

 

Appreciate any pointers and IRS links to understand would be great!

 

 

 

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4 Replies

Planning to Sell my Rental Property in 2022

Capital gain is treated like any other capital gain. You can’t use the home exclusion for rental property. The most frequently error is not including depreciation in calculating your cost basis. You have to do that even if you didn’t claim depreciation when you owned the property. You would do well to consult a tax preparer your area if you are not comfortable with these issues. 

Carl
Level 15

Planning to Sell my Rental Property in 2022

- How do i calculate the Tax?

Not a simple answer by any stretch. But if you send the IRS 20% of your gain on the sale, you should be fine come tax filing time.

 

- Can Capital gain in this sale balanced with other Capital losses (say if i gain 10k in this property sale substituted with 10k capital loss in stocks?)

Again, not a simple answer. But basically, no. Only like-kind losses can offset gains. Gains/Losses are stocks are not "like" gains/losses on the sale of real estate.

- Can I claim the $500k married joint exclusion ( if we are submitting tax return joints and property is on both of us and neither of us lived their since 2015)

No. To qualify for any exclusion, the property must have been your primary residence for at least 2 of the last 5 years you owned it, counting back from the closing date of the sale. You're not even close unfortunately.

- Can i talk to anyone (CPA) in Turbotax in this regard as i probably applying my returns in here?

Only if you have paid for TurboTax Live support. But I do not know if that support includes what is essentially a future tax event that has not yet occurred. Besides, while I doubt it would happen in a way that would affect you, the tax laws on this could be changed by congress tomorrow. So any advice you pay for has that possibility (however slim) of being moot by the time you go to file your 2022 tax return, next year.

You would be better off consulting with a local CPA; especially if you state also taxes personal income, as in addition to federal taxes, you will also have to pay state taxes on any gain realized on the sale.

Planning to Sell my Rental Property in 2022

As has been mentioned, you really need a tax professional for this tax year (2022). TurboTax cannot assist you until the software for 2022 is released and you sign up for TurboTax Live or Full Service.

 

Capital losses can offset capital gains but you will have depreciation recapture and that will be taxed at your ordinary income tax rate up to a maximum of 25%. Also, any suspended passive losses from the rental will be released upon the sale and can be used to offset all other types of income.

Planning to Sell my Rental Property in 2022


@Carl wrote:

Gains/Losses are stocks are not "like" gains/losses on the sale of real estate.


Gains on the sale of rental real estate are "like" gains on the sale of stocks; the gains on both are capital gains (with the exception of unrecaptured Section 1250 gain which is simply taxed at a different rate).

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