Selling a rental on schedule E is this the proper way to enter?

[cbusa]

I want to make sure I am doing this right in turbotax, sold a rental there is the depreciation listing for the rental, another for amortization, and a couple improvements. I would go into edit on each of these, and when it says did you stop using this asset? select yes? Date of sale for each would be the date of same since they were all sold at same time? If asset was sold say for $450k, and land was worth $250k I would put $250k for land sales price and $200k for asset sales price? What is the best way to split land and building? I have an appraisal but it is about a year and half old, the buyer of my transaction had an appraisal but their attorney won't provide. I determined land value above based on the sale of a tear down/land purchase on the same block about year and half ago multiplying the square feet for land value? Asset sales expense I would assume would be relators fee, title cost etc? Do I split the total selling costs ( commissions, title fees) on the settlement statement between land and building so for example say total costs were $20,000 * (250/450) would be land and  $20,000 * (200/450) would be building? For the other items I had listed in depreciation for same property such as improvements and amortizations I assume I would enter 0 for sales price since those are included in the sale of the property itself (ie come with the property) and already factored in?

[cbusa]

I should also add next year 2022 on my 2022 return does this automatically drop off or do I then need to delete?

[DianeW777 · Accepted solution]

You have the right idea.  You can use the tax assessment which would break down land and buildings and then apply your same method to break it down between land and building.  However you should also break it down more for the capital improvements and other assets unless they really would not bring any sale value such as an old appliance.

The rental activity should drop off for 2022 because TurboTax will know that you fully disposed of the rental.  

When you say you have amortizations, if it is for refinanced loan fees, they are handled differently because you are allowed to deduct the full amount remaining in the year of sale.  This would be an expense on your Schedule E and not a 'sale item' per se.  Information on how to handle this, if applicable, is also included.

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 (except as already discussed above).  Use that percentage times the sales price and sales expenses to find the selling price/sales expenses for each asset. As indicated, you can always use the tax assessor's figures (often appraisals are inflated).

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.

You need to dispose of the property by telling TurboTax how and when it was disposed of.  Follow the instructions below.

1. Click on Income & Expenses
2. Under Your income and expenses, scroll down to
3. Rental properties and royalties, click Edit/Add
4. Do you want to review your rental?, click Yes
5. Under Rent and Royalty Summary, click Edit
6. Click Update to the right of Assets/Depreciation.
7. Do you want to go directly to your asset summary?, click Yes and Continue
8. Click Edit to the right of each asset to be disposed
9. Go through several screens until you get to Tell Us More About This Rental Asset
10. Click on This item was sold…….   And continue to answer the questions

You might also review information here.

Refinance Fees - Year of Sale:

Deduct the balance of the refinance fees when the rental is sold: In the Assets/Depreciation section for that rental property, elect to edit/update the entry for your fees.

1. On the 'Review Information' screen click Continue.
2. On the 'Did you stop using this asset 2021?', click YES.
3. On the 'Disposition Information', in the disposition date box enter the date you closed on the sale. > Continue.
4. On the 'Special Handling Required?', click YES.
5. On the 'Depreciation Deduction Amount', select Transfer These Fees For Me To Other Expenses. > Continue.
6. You'll see the remaining fees of the refinance loan to be deducted in the Rental Expenses section. The entry will start with 'Unrealized Refinancing Fees....'