Sale of vacant rental property

[qvs]

I'm working on my 2018 return and had a rental property (bought in 2005) in TX that tenants vacated in Nov 2017. I live in CA and flew out to complete some cosmetic improvements (paint, cleaning, landscaping) then put it up for sale in Dec 2017. (Side note: got a new roof thanks to insurance & Harvey in 2017).

It then sat vacant and for sale until Aug 2018 when it sold. I took the proceeds in cash and got a 1099-S showing the Gross Proceeds in Box 2.

My question is how to report the income/costs, since it wasn't rented at all for 2018. Turbo Tax is saying to remove it as a rental property. It wasn't my primary home either since I live in CA. Should I treat as sale of a Second home? Or sale of Business Property?

Would be grateful for any insight.

Thanks!

[Anonymous]

treat as sale of business property.  this way expenses like utilities, mortgage interest etc would be deductible on schedule E 

if you treated as a second home which you shouldn't because you said it was vacant which implies you did not occupy it as a personal residence    depreciation would still be need to be recaptured. there is no home sale exclusion.   Worse is that you wouldn't be able to deduct utilities and the like because those would be regarded as personal expenses and mortgage interest and real estate taxes would be an itemized deduction.  

[Critter]

To use the Sch E in the program you need to say it was available for rent at least 1 day otherwise the program will kick you out which you have already seen.

[Carl]

Report it in the SCH E section of the program.

Turbo Tax is saying to remove it as a rental property.

When asked how many days it was rented in 2018, say 1 (one) day. You'll still report your rental income as zero for 2018. If you remove it from the program, you will permanently and forever lose all the depreciation data that you are required by law to recapture in the year you sell it. While you can delete the SCH E and report the sale in the "sale of business property" section, that's going around your elbow to get to your thumb and is highly prone to use error.

So just say it was rented for 1 day in 2018 and then press on with life reporting the sale in the Rental & Royalty Income (SCH E) section of the program.

[qvs]

Thanks for confirmation! I decided to try that last night and TT seemed to then ask the types of questions I had anticipated, running me through the correct dialogue. Looks good so far.

Thanks again!

[Carl]

treat as sale of business property. this way expenses like utilities, mortgage interest etc would be deductible on schedule E

You can still claim those expenses on the SCH E. No need to report it in the "sale of businses property" section in order to claim those expenses.