While selling a rental requires specific reporting, it doesn't have to be stressful. Our TurboTax Community Tax Expert Video Tutorial walks you through the exact steps to enter rental property sales in TurboTax.
Here’s a guide to the key tax terminology you will encounter.
- Cost Basis: The original purchase price of your rental property, plus settlement costs at the time of purchase such as title insurance, recording fees, and legal fees.
- Adjusted Basis: Your original cost basis plus the cost of any improvements and sales expenses, minus depreciation.
- Asset Allocation: The method of dividing your total sales price and selling expenses among the different rental assets included in the sale, such as separating the building from the land.
- Sales Price: The gross proceeds from the property sale. You can generally find this amount in Box 2 of your Form 1099-S, or you can use the gross proceeds amount listed on your settlement closing statement.
- Sales Expenses: The costs associated with selling your property, which include advertising, sales commissions, legal fees, and transfer taxes.
- Depreciation: A deduction taken over several years for the property's wear and tear. You will need to confirm prior-year depreciation amounts using last year’s Schedule E or Form 4562.
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