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You will report the sales information under the asset section under rental income and expenses. (see screenshots and step-by-step below)
Once you have signed into your TurboTax Account (for TurboTax Online sign-in, click Here , then select "Take Me to My Return"), type "Schedule e" in the search bar then select "jump to Schedule e".
When it comes to the sale of your rental, if is important to determine the basis in the property (usually cost plus capital improvements less depreciation (less any casualty loss, if any)) because this will determine the amount of capital gain or loss. Rental income/expenses for the year (unless deprecation or expenses directly related to the sale) will not be included in your capital gain or loss calculation.
Additionally, when you sell your property, you must pay 25 percent recapture tax (also referred to as Section 1250 recapture) as well as regular state income tax on the depreciation you claimed. (Remember the IRS will assume that you claimed the correct amount of depreciation every year—this is true regardless of whether you actually claimed any depreciation on your tax return).
Two additional piece of information related to your rental property depreciation and sale:
When you are entering your rental information, you will have two dates to enter:
The reason these two dates are important is you will use them to calculate your basis for depreciation and to determine your gain or loss on the sale of your rental property. TurboTax will guide you in entering this information.
Depreciable basis :In general, the adjusted tax basis of a principal residence is the cost of the property (i.e., what you paid for the property when you first purchased it), plus amounts paid for capital improvements, less any depreciation and casualty losses claimed for tax purposes. Improvements add value to the home, prolong its life, or adapt it to a new use. Regular repairs and maintenance are not included in the tax basis of the home. When a principal residence is converted to rental property, you need to know its basis for depreciation purposes. Its basis for depreciation purposes is the lesser of:
Sale of Rental House : In order to calculate the capital gain or loss when you sell a residence that had been converted to rental property, you need to know three things:
If the converted property is later sold at a gain, the basis for purposes of determining the capital gain is your adjusted tax basis in the property at the time of the sale. If the sale results in a loss, however, the basis used is the lower of the property's adjusted tax basis at the time of the conversion or the fair market value when the property was converted from personal use to rental property. This loss rule ensures that any deflation in value occurring while the property was held as a principal residence does not later become deductible upon your sale of the rental property; a loss on the sale of a principal residence is not deductible. As usual, you calculate your capital gain by subtracting your adjusted basis from the sale price of the property.
To enter your rental sale under the rental section in TurboTax Online or Desktop, please follow these steps:
If the property was not available for renting in 2016 or if your sale requires special handling, you will enter this sale as the sale of a business asset.
To enter this rental sale under the sale of a business property in TurboTax Online or Desktop, please follow these steps:
Click this link for further information about reporting the sale of a capital asset
For the sale of personal residence
You will not be allowed to take a capital loss for a personal use capital asset. Also there is no reporting requirement if the property meets the home gain exclusion (unless you received a 1099-S or took depreciation on the home in a prior year).
You can take the gain exclusion as long as you considered the home your "primary residence" for 2 of the last 5 years. If you have a capital gain from the sale of your main home, you may qualify to exclude up to $250,000 of that gain from your income. You may qualify to exclude up to $500,000 of that gain if you file a joint return with your spouse
To enter the sale of your home in TurboTax Online or Desktop, please follow these steps:
If I live in home for 2 years and rented it for 3 years I qualify for the home sale exclusion but I have depreciation recapture. How do I file for the recapture properly?
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