We sold half of a multi family rental property

[acksov]

We owned a multi family rental property.  Free standing house and garage with a rental apartment, and always reported it on turbotax as a "multi family" rental property.  In 2021, we sold the house but kept the garage and rental apartment.  We don't live in either.    I can't figure out how to report the sale portion while keeping the other rental portion

[acksov]

I should add that we took the house out of service in May of 2020 and did a big renovation and sold it in 2021.  

[LeonardS]

If you have been depreciating all the property as one unit, house, and garage/rental then you will have to split them into two separate items for depreciation and apportion the previous depreciation to each "property" then you will have the basis for the house and a separate basis for the garage/rental units.  You will use the house basis to calculate any gain/loss on the sale.

You are not allowed to deduct any rental expenses for the house for tax year 2021 as it was not available for rent,  However, any of the big renovations that were capital improvements will be added to the basis of the house.

 A capital improvement is something that actually adds to the value of the home or increases its usefulness.  Some examples of capital improvements are:

• Remodels and room additions (including decks and porches)
• New or upgraded landscaping, irrigation, sprinkler system
• Hardscape such as pavement, block or retaining wall, patio
• Fencing
• Swimming pool, spa
• Storm windows, doors
• New roof
• Central vacuum or security system
• Upgraded wiring, plumbing, ductwork
• Central heating, AC, humidifier
• New furnace, water heater
• Filtration, soft-water, or septic system
• Built-in appliances
• New flooring or wall-to-wall carpeting
• Upgraded insulation
• Satellite dish

[acksov]

Thank you @LeonardS for your prompt reply.  

The issue I am having is in the Turbotax program.  How do I "split them"?  When I get to the rental property page, there is only a choice to sell the whole thing or rent the whole thing.

[RobertB4444]

@acksov  Here's the answer, but you're not going to like it.

You disposed of part of an asset.  In order to sell part of it you'll have to replace the asset with two new assets.

You need to print or save all of the info for your current asset.  Print it or save a pdf or something.  Then delete the asset from TurboTax.  Enter two new assets which are a percentage of the old asset.  

You need to figure what percentage of the property you kept and what percentage you disposed of.  Then split the value and the prior depreciation by that percentage.  Then you will enter the two new assets in and then sell one and keep depreciating the other.

Told you you wouldn't like it.