Sale of Rental Property

[Bird0214]

Hello. 

I sold my rental property this year for $160,000 dollars. After the expenses I had a total proceeds of $142,409.16. I paid $125,000 for it. It looks like it is using the entire $142409.16 as taxable income but shouldn't the difference of $142,409.16 and $125,000 be the taxable income? 

Karen

[tagteam]

When did you purchase this rental property? 

Recall that depreciation deductions taken in prior years reduce your basis.

[Bird0214]

Purchased in 2017

[Bird0214]

In 2017

[tagteam]

How did you enter the transaction? Hopefully, in the Rentals section of the program.

Regardless, make sure you entered your basis correctly.

[Bird0214]

I entered it under sale of a business property. So it should be under the "Rental Properties and Royalties" sections? 

Also, how do I calculate my basis? I guess I am not sure what you mean by that.

And, thank you for your help.

[tagteam · Accepted solution]

If you have been using TurboTax in prior years, you should enter the transaction in the Rental Properties and Royalties section.

Your adjusted basis would typically be your cost plus improvements less depreciation deductions allowed or allowable.

[LDJB]

I inherited rental property in 2006. I sold it in 2020, how do I calculate my basis?  I've been using turbo tax since 2016.  

[tagteam]

@LDJB 

Your basis would typically be the fair market value on the date of death of the decedent but you might want to provide more details.

[Carl]

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.

[JanetF2]

I have been searching through all previous answers but cannot seem to find what I need, so sorry if this has been covered before.  We purchased our rental in 2008, renters moved out in October 2019 but could not find a buyer until August 2020, depreciation was about 70,000. I managed to handle that however, we purchased for 332,000 and  sold for 250,000 so we ended up with a loss.  My question is where can I actually enter these figures, turbo tax does not seem to automatically compute or lead to the correct form.  Thank you.  I already had to start over as I made the mistake of saying I had not rented for all of 2020 so TT deleted everything!

[Carl]

What part of my previous response in this thread is it, that's not clear?

[baisley]

where do I report the sale of a condo that I paid 71000 and put in 11000 of renovations and received 74000

[baisley]

where do I report sale of rental property at a loss?

[Carl]

where do I report sale of rental property at a loss?

Same place you report it at a gain, provided the cost basis of the property is what you paid for it when you originally acquired it.

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  2021". Select it. After you select the "I sold or otherwise disposed of this property in 2021" 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 2021" 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.