topic Partial owner, sale of a primary house that I used for rental purposes as well? in Deductions & credits

Partial owner, sale of a primary house that I used for rental purposes as well?

Tonytiger99 — Wed, 18 Sep 2019 23:36:29 GMT

I have a bit of a tricky situation.

I was a part owner (40%) who bought a house in June 2015 for $1.07M. We added an in-law unit (~$60K) on the ground floor which we rented out starting August 2015 while we lived on the upper floor ourselves. We sold the house in June 2018 for $1.5M.

Question 1) It appears that up to $250K in profits can be excluded if this was my primary residence for 2 out of the previous 5 years, which it was. The part I'm unsure about is whether renting out part of the house negates this tax break? Also, because I was a part owner, does that mean I'm only obligated to 40% of the $250,000 tax break?

Question 2) This one is a bit off topic and long-winded. I'm really unsure how the other owners reported the sale of the house on their end - it was an ugly mess hence why we had to sell the house. I have lost contact with them since. I'm not a tax expert by any means, but when filing my taxes, is it safe to assume that I should file it according to my ownership percentage (40%), or if I should input the total amounts (100%). I'm afraid we will get flagged for double counting. For instance, there was a section asking how much we paid for in property taxes. The total was $7,964. I was responsible for 40% of it, so $3,185.60. When inputting into the Turbotax software, do I put $7964 or $3185.60? There was a separate section that asked about ownership percentage, to which I put 40%. I'm unsure if I should put the full amounts of everything such as rental income, property tax, etc, and the software will automatically account for my 40% ownership?

Re: Partial owner, sale of a primary house that I used for rental purposes as well?

Critter — Thu, 19 Sep 2019 01:09:39 GMT

Well let's start with a couple of clarifying questions ... was part of it a rental in the year of sale ? And did you get a 1099-S for the sale and if so was only your % of the sale on it or the entire amount ?

Re: Partial owner, sale of a primary house that I used for rental purposes as well?

Tonytiger99 — Thu, 19 Sep 2019 10:26:20 GMT

Yes and Yes.

The 1099-s shows my percentage ($600,000 or 40%*1,500,000)

Re: Partial owner, sale of a primary house that I used for rental purposes as well?

Critter — Thu, 19 Sep 2019 12:45:26 GMT

Ok ... since you have the rental already in the program all you have to do is follow the screen instructions to sell the asset. Read all the screens carefully so you can indicate this was also a primary residence so it will compute the portion eligible for the exclusion. I HIGHLY recommend you either use a professional local preparer OR upgrade to the LIVE option in the TT program if you feel lost in the process.

Re: Partial owner, sale of a primary house that I used for rental purposes as well?

Tonytiger99 — Fri, 20 Sep 2019 00:30:20 GMT

I agree, I've already been asking around for quotes. So far the range is from $400-1200 to do my tax return. I asked around other online places and some people have said $1000 is too low for my case. My brother, who did my taxes for the past 7-8 years, says $1000 is too high. Who do I trust?