sale of rental property

[wms52]

We sold our rental property on Jan. 15, 2025. The property (a 2-family residence) was purchased on Oct. 8, 2013 for $350,000,  required about $150,000 in renovations, and was sold for $850,000. We used TurboTax for most of those ten years. We are using the TurboTax program which we purchased at Sam's Club (I am not sure if that is referred to a TurboTax ONLINE or TurboTax DESKTOP).

We are unable to follow TurboTax 2025 for the capital gains. There is no direction under RENTAL PROPERTIES AND ROYALTIES. I have tried multiple times....but cannot find SALE INFORMATION.

What are we doing wrong? 

[MindyB]

You aren't doing anything wrong - there is no obvious place to add just the sale of the home by itself in the rental section, instead, you'll navigate to the property info to indicate you sold it, and go to the assets and indicate here the assets (including the actual house) were sold. The interview will populate questions to determine the correct capital gain.

When you sell your rental property, follow the steps to report the sale found here: I sold my rental property. How do I report that?, with the selling expenses you asked about being reported in step 10:

"To report the sale of your rental property, follow the steps below:

1. Go to the rentals section
2. Answer Yes to the question Did you have any income from rentals or royalties? (You may not see this question since you have had the rental already entered)
3. On the Your rentals and royalties summary page, select Edit (pencil icon) beside the property you sold.
4. Select Edit (pencil icon) next to Rental property info.
5. Under General info, select Edit under Situations (or on the page Tell us about your situation this year), then select Sold or disposed of property. 
6. Continue through the screens until you return to the Here's your rental property info screen.
7. Select Edit next to Sold rental property or Sale of property/depreciation.
8. Go directly to your asset summary and select Edit beside the first rental asset you sold.
9. Continue to the page Tell Us More About This Rental Asset and check the box for The item was sold... Enter the date of the sale in the pop-up box.
10. Follow the prompts to enter the sale information, including the sales price and selling expenses you calculated above.
11. Continue back to the Rental Asset list.
12. Repeat steps 9-11 for each rental asset.
13. Continue back to the Property Summary page. Select Done/Continue and answer any follow-up questions."

[user17729139211]

FWIW these prompts and screens you describe do not exist on the Turbotax Desktop version (neither on the Deluxe or the Premiere).

On Premiere, if you click "extra help" you see this exact set of instructions/steps (supposedly for the Desktop version!)  - but you can't follow them. The screens/items described do not exist. There is no "Rental Property Info" with a pencil icon next to it (step 4). There is no "General info", no "Situations" (step 5).

I paid additional for Premiere this year to help with a similar situation and am stymied by the lack of guidance even though Turbotax upsold me by promising extra help with rental real estate sale.

Very disappointed.

[DianeW777 · Accepted solution]

TurboTax Desktop does have very similar screens, with the exception of the 'Rental Property Info' and General Info'.

For your rental property sale in TurboTax Desktop see below:

1. Search >  Type rentals > Click on the Jump to... link > Continue to the Rental and Royalty Summary screen
2. Select Edit next to your sold rental property > Scroll to Assets/Depreciation > Update
3. Once you reach the asset section of your rental property you will select each asset and then indicate the following as the screens come
   1. On the screen 'Tell Us More About This Asset' 
      1. Select I purchased this asset and The item was sold, retired, etc...
      2. Enter the date of sale
      3. Continue to Select 'No' for Special Handling.
      4. No - it was not the sale of your main home
      5. Enter your Sales Price, Sales Expenses, Land Sales Price, Land sales expenses.

See below the best way to arrive at your selling prices for any and all assets. 

Here is an example of how you prorate the selling price to each of the assets including the land.  

For any asset, such as appliances, that really have no value because they are past the recovery period of five years you can use a zero.

Use the original cost of each asset listed on depreciation, add those together then divide each one by the combined total to find the percentage of the cost for each asset.  Use that percentage times the sales price and sales expenses to find the selling price/sales expenses for each asset. If you want you can check the allocation of building and land in your county real estate tax office, on file now.

Example:  Original Cost (of each asset on your depreciation schedule)

$10,000 Land                = 13.33% 

$50,000 House              = 66.67%

$15,000 Improvements  = 20%

$75,000 Total                 = 100%

Multiply each percentage times the sales price/sales expenses to arrive at each individual sales price/sales expense.

Passive Activity Loss Entry if applicable:

Assuming your passive losses were carried over each year, this will be a separate and identifiable entry which will carry to the Schedule E.  The full remainder of passive loss carryover is used in the year of sale as an expense. This is combined with your overall rental gain or loss to your Form 1040. 

• When you are on the screen 'Do any of these situations apply to this property?' (Property Profile section), be sure to check the box under Carryovers. 

You might also review information here for more details 

@user17729139211 

[wms52]

Thank you. First I will change the TURBOTAX "Confirm Your Depreciation". I don't know where they get the number from (maybe a percentage of our original purchase price in 2013) but it was almost 300% of what we actually depreciated. I will see how that changes the TURBOTAX tax-due calculation. I almost had a heart attack when it calculated that we owe $305,000 tax on a $400,000 capital gain on the sale of our rental house. Then I will try to follow your suggestions. The NEXT QUESTION is .... where do you enter the $140,000 in renovations that we did on the house when we first bought it? I entered the original $349,000 purchase cost but the house needed a lot of repairs before it was liveable.

[MelindaS1]

You add that on to the amount you entered for original cost; this represents your adjusted cost basis.

[user17729139211]

I was told by another expert on this forum NOT to add improvements to the original cost, but to add them to the sales expenses. See here: https://ttlc.intuit.com/community/investments-and-rental-properties/discussion/adusted-cost-basis-fo...

Which is it?

[MelindaS1]

Sorry for any confusion! Since these methods work out to the same result in the end (in terms of taxable gain/loss amount), you can choose whichever method feels most 'right' to you, but if you'd like to go along with the expense method the other expert was describing in more detail, then I fully understand that instinct. 

Hope this help clear things up. 

[user17735752540]

You are not doing anything wrong.   The program is not working.  I've been on customer support text for several days with solutions that don't work.  Turbo Tax is faulty and cannot seem to fix this problem.  There customer support people try hard but have no fix.    I"m losing all hope for getting my taxes finished this year because I cannot report the sale of a rental.

[user17735752540]

This does not function as suggested as of 3/15/26

[user17735752540]

When will the section of Sale of property/depreciation be updated and function properly.  As of 3/15/2025, I cannot finish my taxes.   I sold a condo unit and Turbo Tax is not able to take that info and customer support is of no help.  They have many solutions but they seem to functioning in the dark.  The originally said the forms were not issued from IRS, but that is not true now and probably wasn't then.  I bought a product that is not working.  I've used it for 25 years and this is the first major disappointment that has some very significant consequences for me.

[user17729139211]

In the same boat here. I thought I had figured out how to enter improvements by adjusting the cost basis manually, but then the adjusted basis did not flow to the state form, and when I posted the query on a different thread (see here: https://ttlc.intuit.com/community/investments-and-rental-properties/discussion/adusted-cost-basis-fo...) I got contradictory information - some experts telling me to add the improvements expenses to the sales expenses, and apportion them proportionally to land, house, other purchased assets - which seems like it would raise a huge red flag, if you added (in the OP's case) $150K+ of sales expenses - and other experts telling me to add the improvements to the cost basis by "adjusting the cost basis". But I have yet to receive instructions about where and how to "adjust the cost basis" so that the depreciation is also calculated correctly (if you own a property over multiple years, it will already have depreciated, and I assume there is some formula involved when you add in improvements on the cost basis of a property that has depreciated since purchase?)

I have had my taxes on hold now for a week or so waiting to get a definitive answer, or for the program to update. 

Also a 25+ year user of TurboTax, so I know my way around the program (and doing taxes in general). I updated this year to the 'Premiere' program while I was midway through prep, thinking that it might have the interview steps needed to deal with the expensing of improvements, and was MASSIVELY disappointed - all it had was a link to "extra help" which then described a series of screens and steps that DO NOT EXIST within the program (see my earlier reply above). So, a waste of an additional $40 for the upgrade, and not sure what my next steps will be. Certainly not going to pay TurboTax more for "expert help" if I'm going to get contradictory advice.

Hoping they get the program working before April 15, in the meantime I'm sitting on hold. 

[user17735752540]

• Isn't this the reason why we buy TurboTax for the step by step questions. The guide that takes us to places we need to be.  We are not supposed to have to figure out tax forms and how to input information. That is a service that turbo tax says it provides.  They are certainly failing this year.