2216241
I sold my rental property, and I'm on the screen that says to report the sales price and sales expenses. In the sales price box, do I report the amount of sale minus the loan amount that was paid off during the sale? Or how does that work if after the expenses and the loan pay off, I received 133k?
For example:
House Sale price is 256,000, Loan is 105,000 that is being paid off from proceeds. In the sale price would it be 151000? Because when I put 256,000 amount in, and the expenses, without the loan payoff, it says the income amount I received was 175,000 but i only received 133k.
I bought the property back in 2005 for $145,000. Lived in it for a year then turned it into a rental. If that helps anything.
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No, your mortgage is not considered when determining gain and loss. It is not how much money you ended up with. The formula is purchase price + improvements+ sales expenses-depreciation. This gives you your basis. This is contrasted to the contract sales price on your HUD. Then you can see if you had gain or loss. When you answer the sales price, that is what is needed.
House Sale price is 256,000, Loan is 105,000 that is being paid off from proceeds.
Your loan payoff is not deductible on any tax return, ever. It just doesn't figure into the equation at all.
So if I bought it for 145,000, made 15,000 in improvements over the time i had the property, and had 18,000 in sales expenses, but not sure what the depreciation amount is - where would that put me?
Don't overthink and over complicate this. If you've been reporting things correctly with TurboTax in years past, the program has all the cost basis and depreciation figures already. When you start working through an asset, the first or second screen of the asset shows you the prior year's depreciation. When you finish working through an asset, the last screen shows you the current year's depreciation being taken.
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 2020". Select it. After you select the "I sold or otherwise disposed of this property in 2020" 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 if it's zero. Then you MUST work through the "Sale of Property/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 on some assets. Likewise, if you sold at a loss then you must show a loss on all assets, even if that loss is $1 on some assets.
Basically, when working through an asset you select the option for "I stopped using this asset in 2020" 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.
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