Sold rental property which was personal residence

[AK1982]

I am confused where to report these properties below and depreciate & AMT part of it.
I purchased this house in 2011 and lived there for 6 years before rented out. It was rented for 8 month in 2018 and sold it in March 2019. (Where do I report this property, I always used Turbotax business desktop CD). Last year I reported as business since it was rented for 8 months in 2018.

How do I Depreciate and AMT (If it apply to me)
I bought this house for $65K in 2011 and sold it for $149K
It was rented out for $1400 a month for 272 days (8 months) It was not rented after this time and sold in March 2019.

In March 2018 I purchased condominium to flip and sold it in October 2019 (Where to report this) It was strictly for flip (not rented out at all)

Thank You!

TuruboTax user since 2012

[ColeenD3]

Since it was not rented in 2019, you will enter it in Sale of Business Property. Keep your depreciation amount from your 2018 return to recapture. Your rental property was not a Business in the sense that you needed to use a Business program. Premier handles rental property.

You also see to be eligible to exclude a portion of the gain. If you lived in the home for 2 out of 5 years before the date of sale, you qualify for an exclusion.

How your sale qualifies.   Your sale qualifies for exclusion of $250,000 gain ($500,000 if married filing jointly) if all of the following requirements are met.

• You owned the home and used it as your main home during at least 2 of the last 5 years before the date of sale.
• You didn’t acquire the home through a like-kind exchange (also known as a 1031 exchange), during the past 5 years.
• You didn’t claim any exclusion for the sale of a home that occurred during a 2-year period ending on the date of the sale of the home, the gain from which you now want to exclude.

Your condo would also be entered separately, in the same section.

[Carl]

If it was rented for a total of 8 months for the entire time you owned it, and all 8 months were within a single tax year, then you were not required to depreciate it. However, if you did depreciate it, then what's done is done and you have to recapture that depreciation in the year of the sale.

Since the last occupant to move out of the house prior to the sale was a paying tenant there's really no need to convert the property back to personal use. Just leave it classified as residential rental real estate and report the sale in the Rental & Royalty Income (SCH E) section of the program. Your life will be a whole lot simpler that way. Besides, with what will be a total of 10 months depreciation from May of 2018 when you started rented it, through March of 2019 when you closed on the sale, isn't going to make much of a difference (if any difference at all) to your tax liability. You'll only be recapturing 2.576% of the structure value anyway.

Then, since the house was your primary residence for "2 of the last 5 years" you owned it, you won't pay taxes on the first $250K of gain ($500K if filing joint) which means you will only be taxed on that recaptured depreciation. That's it.

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.