Rental Property Sold Jan 6, 2020. Schedule E needed??

[nsbohm]

All income and expenses (except for an insurance refund), with tax corrections, were included on the settlement sheets... since we only owned it for 6 days of the year.

Do I need to parse out the business portions from the settlement sheets (along with the insurance refund) and fill out schedule E (and then also file for the sale w/depreciation)?

OR

Do I figure the insurance refund in as a gain from the sale and just file for the sale of the property (w/depreciation) without schedule E?

I'm not sure it matters, but don't want choose incorrectly.

[Anonymous_ · Accepted solution]

If you have been entering this rental property into TurboTax previously, then you will probably want to use the Rental Properties and Royalties section of the program for the sale (which will have the accumulated depreciation figure, as well as other figures).

The refund can be entered as other income if you had deducted the full amount in the previous year.

[nsbohm]

Yes, I've used Turbotax for years and will use the Rental Properties and Royalties section of the program for the sale...

BUT, do I separate out the individual line items from the sale/settlement sheet for rent received, utilities paid, taxes paid, tax credit from buyers,... and fill out the individual income/expense items as I did all previous years, then the section for the sale info?

OR 

Leave the individual income/expense items blank and just fill out the section for the sale (which will include all the line items/offsets for running the business for 6 days)?

[Carl]

Here's the guidance for how to report the sale in the rental section. It keeps all your depreciation history and other things on track.

Reporting the Sale of Rental Property

If you qualify for the "lived in 2 of last 5 years" capital gains exclusion, then when prompted you WILL indicate that this sale DOES INCLUDE the sale of your main home. For AD MIL personnel who don't qualify because of PCS orders, select this option anyway, because you "MIGHT" qualify for at last a partial exclusion.

Start working through Rental & Royalty Income (SCH E) "AS IF" you did not sell the property. One of the screens near the start will have a selection on it for "I sold or otherwise disposed of this property in  2019". Select it. After you select the "I sold or otherwise disposed of this property in 2019" you continue working it through "as if" you still own it. When you come to the summary screen you will enter all of your rental income and expenses, even it it's zero. Then you MUST work through the "Sale of Assets/Depreciation" section. You must work through each individual asset one at a time to report its disposition (in your case, all your rental assets were sold).

Understand that if more than the property itself is listed in your assets list, then you need to allocate your sales price across all of your assets.  You will only allocate the structure sales price; you will NOT allocate the land sales price, since the land is not a depreciable asset.  Then if you sold this rental at a gain, you must show a gain on all assets, even if that gain is $1. Likewise, if you sold at a loss then you must show a loss on all assets, even if that loss is $1

Basically, when working through an asset you select the option for "I stopped using this asset in 2019" and go from there. Note that you MUST do this for EACH AND EVERY asset listed.

When you finish working through everything listed in the assets section, if you ever at any time you owned this rental you claimed vehicle expenses, then you must also work through the vehicle section and show the disposition of the vehicle. Most likely, your vehicle disposition will be "removed for personal use", as I seriously doubt you sold your vehicle as a part of this rental sale.

[nsbohm]

Thank you!!