Selling rental property with varied personal use percentages?

[thompsam]

I'm doing a "what if" tax scenario for an upcoming rental property sale. The property has never been my primary residence and has been classified as a rental property for all 15 years I’ve owned it.  12 of the 15 years had a high business use percentage as I only used the property for less than 14 days those years.  Three of the years, including this one, had higher personal use percentages, 40-60%.

When I enter the sales information, TurboTax assumes the business use percentage of the current year (which is low)  was the same for all years I've owned the property, which is causing my gain to be much higher than it should be. 

When I get to the "Special Handling Required?" screen, one of the choices is " The business use percentage of this asset varied during the years you owned the asset.  Learn more." When I click the “Learn more" link, TT Help tells me the "... program cannot automatically compute the sale information" 

Does Intuit provide any resources (web site link maybe) to help me manually complete the sale information as I am stumped as to how to proceed?  

[Critter-3]

.The program will not work well for you as you need to do some of the math yourself and use the FORMS mode in the Downloaded version  to do this correctly  ... this is a tax year when you should upgrade to the LIVE option for one on one assistance  OR   seek a local tax pro for assistance on this return.

[thompsam]

Thanks.  I'm happy to do the math myself and use the "FORMS" mode, what I'm looking for are some TurboTax instructions/guidance explaining what I have to do.  I've kept track of how much depreciation was taking on the property each year as well as on each of the depreciated capital improvements.  I'm just looking for some guidance on how to enter the appropriate information in the TT application.  I can't be the only vacation property owner that has faced this hurdle.  The "Learn more" link in the TT dialog doesn't really wasn't at all helpful.

[Critter-3]

Your situation is more than this simple forum can help you with ...  I highly recommend you seek out local professional assistance or upgrade to the LIVE option for this tax year.  

This is akin to being willing to fix your own  transmission however you would need the tools and knowledge to do it and TT is not the right tool and this forum is not the right manual. 

[thompsam]

Maybe I am misunderstanding what value should be used in the business use percentage field when calculating the sale's gain.  During the entire time I've owned the property, it has never been converted to or from a personal use property.  It's been a 100% rental, but since its a vacation property that isn't rented during the offseason, we've had some personal days of use, mostly less than 14, a few years more.

Since the property has never been a personal use property, should I simply be using 100% as the business use percentage.  In looking at the forms that get generated when 100% is used, the values for the basis, the depreciation and the gain amounts are what I expect. 

[dwhens]

Hi,

I'm wondering if you ever found the answer to your question. I'm facing the same situation this year (2021). I'm also more than happy to do the math myself. In my case, once we put the property in service, we never exceeded the 14 limit. We sold the property in 2021.

Thank you

[DianeW777]

The IRS has a two-fold selection to determine personal use days.  IRS Topic 415 describes the following for rental use and personal use property

If you rent a dwelling unit to others that you also use as a residence, limitations may apply to the rental expenses you can deduct. You're considered to use a dwelling unit as a residence if you use it for personal purposes during the tax year for a number of days that’s more than the greater of:

1. 14 days, OR
2. 10% of the total days you rent it to others at a fair rental price.

Next is the way to calculate a weighted average of the business use portion of the assets, as well as the selling price and sales expenses for each asset.

• If you use the dwelling unit for both rental and personal purposes, you generally must divide your total expenses between the rental use and the personal use based on the number of days used for each purpose.

For the rental portion of the return: You can enter the accurate business use percentage in the rental property section for the current year and select that you disposed of the property.  However, in the rental section do NOT say it was sold.

For the sale portion of the return: This will require manual entries for the sale of business property portion of the tax return.  Gather your numbers after calculating the weighted average for each asset, including the current year depreciation for all assets and then enter the sale manually in the Sale of Business Property section (Form 4797). 

For the personal use portion, you will sell it like a second home sale under Investment Income.