I am in total and complete disagreement with Coleen's response. If you delete the SCH E from your 2019 tax return, you find yourself having to do a lot of math yourself, and the probability of human error is extremely high. Additionally, if you don't have the 8582 and both IRS Form 4562's for that property from your 2018 return, you're screwed.
Since you did not convert this property from rental to personal use on your 2018 tax return, this will create it's own problem with your 2019 return, and it won't be the only problem. I'm not getting into the details of the multiple problems it will create. I could write a novel.
But if you've already deleted the SCH E, the only possible way to get it back now is to clear your return and start all over from scratch so you can import it again from your 2018 tax file.
The property remains classified as rental real estate on your 2019 tax return.
did not check I did not rent, nor attempt to rent this property at all in 2019. Is this the correct entry?
Yes, do not check that box. Just continue on through. Then like you said, days rented is zero. Rental income is zero. (you have to enter a digit in the rental income seciton, even if that digit is a zero.)
For rental expenses, enter nothing. But you must work it through for the 1098 information which you will need to enter. (Only if you actually received a 1098 for this property.)
You'll report the sale in the "sale of assets/depreication" section. The program will then take care of the depreciation recapture for you automatically, as this removes any possibility of human error on the recapture math, provided you follow the below guidance on reporting the sale.
- Cost incurred in preparing the property for sale are sales expenses. These usually get added to your cost basis.
- Cost incurred in dealing with the loan are subtracted from your gain. Not only does this include costs associated with paying off your own mortgage on the property, but you will also have amortized costs (most likely shown as such on the 4562) of which you can totally deduct the amount remaining to be deducted, from your gain.
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 ahve 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.
