Stopped Renting Out a House In 2016 . . .

[J303]

In 2016 I did a major update to a rental house I had purchased and had been renting out for the previous 15 years.  I of course had a lot of depreciation over the previous 15 years and started depreciation of the newly installed items that were installed in 2016.  When the upfit was completed, and despite trying, the house did not rent out when the upfit was completed perhaps due to the new higher rental rate.  A few months later in 2016 I moved my handicapped daughter into the house and no rent has been paid by her or any other tenant since then, and my daughter still lives there, rent free. I claimed no depreciation in 2017 or beyond, I just dropped the house from my 2017 and beyond Schedule E.

I am thinking of selling the house later this year (2023) or possibly next year, but this house has not appeared in my Turbotax Home & Business since 2016. Not sure how to figure out how to report the sale of this depreciated house and all the improvements when it finally happens.  Suggestions please?   

[Cynthiad66]

You will definitely need the total depreciation on the home during the rental period as that amount is used in the calculation on the return.  If you have a copy of your 2016 tax return, you can see the information there on form 4562.

TurboTax will definitely perform all of the calculations for you if correct numbers are entered.  You will simply need to sign onto your TurboTax account then type in the Search Bar "Sale of residence" then click Jump to and you will be taken to area for entering information for the sale.

You generally need to report the sale of your home on your tax return if you received a Form 1099-S or if you do not meet the requirements for excluding the gain on the sale of your home.  This was a former rental property and therefore you must report the sale of the property on the return.

Click the link below for additional information on reporting the sale of a residence.  Aspects of Selling Your Home

[J303]

To be clear, I use the desktop product so there is nothing to sign into. When I type Sale of residence in the search bar  in my TT desktop product it just searches continuously, nothing comes up. Also to be clear, this house was never my own residence, it was purchased to be a rental property and was so for quite a few years until my daughter moved into it in 2016. 

Form 4562 does not seem to be the place to record the sale information of the real estate and all the individual items that are being depreciated from the original purchase years ago plus updates then and along the way,  and more recently the large upfit done in 2016 of over $30,000 for about a dozen items. 

[ErnieS0]

Enter this as a sale of business property since it was previously a rental.

1. Type sale of business property in Search (magnifying glass) in the top left corner
2. Select Jump to sale of business property
3. On "Any Other Property Sales?" select Sales of businesses or rental property that you haven’t already reported
4. On "Sales of Business or Rental Property" enter your information. You will need information from your 2016 return to match your original cost and depreciation.

You can add to your cost any improvements you made after you stopped using it as a rental.