Where to to enter business assets sold

[RuffyK]

In Sep 2023 I converted a long term rental to personal use. I removed the Sch E and associated assets from TT in 2024, and finally sold it in 2025 after remodeling.

How (and where!) do I re-enter each associated asset; and is my 2023 Form 4562 all I will require?

How and where do I enter the following examples (listed on my 2023 form 4562):

--

House [01/2014]  [Cost (net):100000] [Method:SL/MM] [PriorDepr:40000] [CurrentDepr:2500]

Porch [01/2015] [Cost:10000] [Method:150DB/HY] [PriorDepr:7000] [CurrentDepr:1000]

Appliance [01/2020] [Cost:1500] [Method:200DB/HY] [PriorDepr:1000] [CurrDepr:200]

Roof [01/2019] [Cost:7000] [Method:SL/MM] [PriorDepr:400] [CurrentDepr:1920]

--

Also, is it important that the names of these Assets is identical to the names in the 2023 tax filing, so that the IRS can match them together?

Do I add in the remodel cost ($25000) in the same place?

Thank you! 

[maglib]

In TurboTax, enter the sale of your home under Federal Taxes > Wages & Income > Less Common Income > Sale of Home (gain or loss). Use the "Search" bar to find "sale of home" and select the "Jump to" link to get there. The tool will walk you through the sale details

The sale of a primary residence exclusion under IRS Section 121 allows homeowners to exclude up to $250k (single) or $500k (married filing jointly) of capital gains from taxable income. 

If you owned the home and used it as your residence for at least 24 months of the previous 5 years, you meet the residence requirement. The 24 months of residence can fall anywhere within the 5-year period, and it doesn't have to be a single block of time. All that is required is a total of 24 months (730 days) of residence during the 5-year period. Unlike the ownership requirement, each spouse must meet the residence requirement individually for a married couple filing jointly to get the full exclusion.

If you were ever away from home, you need to determine whether that time counts toward your residence requirement. A vacation or other short absence counts as time you lived at home (even if you rented out your home while you were gone).

If you become physically or mentally unable to care for yourself, and you used the residence as your main home for at least 12 months in the 5 years preceding the sale or exchange, any time you spent living in a care facility (such as a nursing home) counts toward your 2-year residence requirement, so long as the facility has a license from a state or other political entity to care for people with your condition.

If you don't meet the Eligibility Test, you may still qualify for a partial exclusion of gain. You can meet the requirements for a partial exclusion if the main reason for your home sale was a change in workplace location, a health issue, or an unforeseeable event. There are other exclusions for military/ divorce, etc. 

 

To calculate the gain/loss on the sale.  Selling price - selling expenses  is your net realized.  You then must subtract your basis in the home and property which would be adjusted for all  capital improvements you made and reduced by all prior depreciation you took or were allowed to take during the period it was a rental.  You can utilize your depreciation schedule from TT in the year you last used it as a rental.  Your basis would include the $25K in capital improvements done while a personal residence too. You also must reduce your basis by any insurance reimbursements.

 

For more detailed information please review the IRS Topic No. 701. https://www.irs.gov/publications/p523

 

@RuffyK

[RuffyK]

Thanks for chiming in about the exclusions, however I am not convinced I should enter in TT under "Sale of Home", because when I tried that TT specifically prompted me to enter it under "Sale of Business Property" (if said home had been used in a business which it had.) In addition, I really do need all my original questions answered! Thus again but maybe more briefly:

1) I think I need to enter each and every asset from the most current (2023) "Depreciation and Amortization Report" separately. Is that true?

a) If true: Where and How in TurboTax is that done?

b) If false: Do I simply need the total depreciation taken over the years for all assets associated with said Schd E to match with the depreciation amount I enter on the sale.  And furthermore I thought depreciation on Appliances was handled slightly differently during a sale, which is why I included the Depr Methods in my original post.

2) Is it important that the names of these Assets are identical to the names in the 2023 tax filing, so that the IRS can match them together?

Thank you! 

[maglib]

  I'm assuming you met 48 months and it was a personal residence at time of the sale, you can enter it as a sale of home.  The interview will take your through the adjustments or just do it in an excel spreadsheet as to me it is much simpler.   Do note that the history or prior depreciation is not available in the rental section of the interview when you converted it to personal use from the prior year.  You just proceed through the rental interview section to report the sale then it is rental and can use the rental section of the interview.  The improvements that were not fully depreciated would all then need to be reinput from the last year you reported it on Schedule E as TT did not maintain it when it was converted to personal use.

I am assuming you lived there 48 months of past 5 years.

• Go to Income & Expenses > Less Common Income > Sale of Home.
• Indicate it was your main home and you lived in it for 2 of the last 5 years.
• When asked, "Did you use this home for anything other than your primary home?" select Yes.
• Input the required depreciation from the years it was a rental.
• The program will prompt you to enter the number of days of "non-qualified use" (when it was a rental) to prorate the capital gains exclusion.
• Depreciation Recapture: You must report and pay taxes on any depreciation claimed while it was a rental.
• Exclusion: If you meet the 2-of-5-year rule, TT will exclude up to $250,000 ($500,000 for married filing jointly) of the gain, minus the depreciation recapture.
• Non-Qualified Use: Days rented are considered "non-qualified use" and will reduce the amount of gain you can exclude.

  Otherwise Rental Section:  Go through the rental interview. One of the screens near the start will have a selection on it for "I sold or otherwise disposed of this property in  2025". Select it. After you select the "I sold or otherwise disposed of this property in 2025" you continue working it through "as if" you still own it. You will have to reenter every asset from the depreciation history you have (easier to do in FORMS MODE if you have the desktop version). When you come to the summary screen you will enter all of your rental income and expenses, even if it's zero. Then you MUST work through the "Sale of Property/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). You will need to allocate your sales price across all of your assets including the capital improvement you did.  You will only allocate the structure sales price; you will NOT allocate the land sales price, since the land is not a depreciable asset.  

@RuffyK

[RuffyK]

Unfortunately, I still need my original questions answered for a non-personal residence!

[maglib]

Yes during the rental interview you would have to go through each asset and know all prior depreciation taken and allocate sales price to each asset. . I did post how to do it above too. You need to say not rented, etc…

make sure to also input state as many states do not allow accelerated depreciation. 

you also need to know prior year unallowed losses if any exist as that increases basis.   

easiest way to enter is in forms mode  you need an Asset Wks (name you called it) for each asset.  You can save time by not inputting fully depreciated assets.  Allocate sales price by % of sale each asset in the disposition section.  (The Depr Report from the last year will help greatly).