I sold my rental property. How do I report that?

• Sales Price – If you received a Form 1099-S, look in Box 2 (Gross Proceeds), which will generally be your contract sales price. You can also use the gross proceeds amount from your settlement closing statement.
• Sales Expenses for selling your property include sales commissions, advertising, broker and legal fees, and transfer taxes.
• Basis is your rental's original purchase price plus settlement costs at time of purchase (abstract, legal and recording fees, surveys, transfer taxes, and owner's title insurance).
• Adjusted basis is your basis plus improvements and sales expenses minus depreciation.

When you sell a rental property, you often have more than one rental asset included in the sale. To report the sale of all rental assets, you need to allocate the sales price (and any selling expenses) to each asset. 

You can use any reasonable method to calculate this allocation, but most taxpayers use the adjusted basis at the time of the sale. 

Determining percentages

The first step in allocating sales proceeds is to determine the percentage of the total basis that belongs to each asset. You would then apply each of those percentages to both the sale price and the selling expenses to allocate them accordingly.

Example:

If you have other rental assets, add them to a similar table (like the one above)  to clearly show the breakdown of each asset.

Reporting the sale

To report the sale of your rental property with multiple assets, follow the steps below:

1. Open or continue your return.
2. Navigate to the rentals section:
   • TurboTax Online/Mobile: Go to rentals.
   • TurboTax Desktop: Select Search Topics. Search for and select rentals.
3. Answer Yes to the question Did you have any income from rentals or royalties?
4. On the Rental and Royalty Summary page, select Edit (pencil icon) beside the property you sold.
   • If you didn't report this property last year, you'll need to complete all the interview questions, including setting up the asset(s) for depreciation.
5. Select Edit beside the Rental Property info.
6. Under General Info: Situations (or on the page Do Any of These Situations Apply?), select I sold or disposed of this property. 
7. Continue through the screens to the Property Rental Summary page.
8. Select Edit beside Sold Rental Property or Sale of Property/Depreciation.
9. Go directly to your asset summary and select Edit beside the first rental asset you sold.
10. Continue to the page Tell Us More About This Rental Asset and check the box for The item was sold... Enter the date of the sale in the pop-up box.
11. Follow the prompts to enter the sale information, including the sales price and selling expenses you calculated above.
12. Continue back to the Rental Asset list.
13. Repeat steps 9-11 for each rental asset.
14. Continue back to the Property Summary page. Select Done/Continue and answer any follow-up questions.