topic Sell of Rental Property in Business & farm

Sell of Rental Property

avahr — Mon, 29 Mar 2021 00:40:49 GMT

We bought a house in 8/2014 for $292000 as our primary house. We lived in the house until 9/2019 as we bought another house. We then used the house as a rental property for less than a year, and sold it in 7/2020 for $400000. Now, it seems like the Turbo tax is calculating about $93000 that we made on this house as taxable gain on a business (in section: "Sale of Business Property") although we only rented it for 10 months.

I was told that if we live in a house for more than 2 years, we can exclude the gains from taxes. Where are we doing this wrong?

Re: Sell of Rental Property

ColeenD3 — Mon, 29 Mar 2021 14:01:37 GMT

Where did you report the sale? If you had income in 2020, you should have entered all the details of the sale in that section. As you go through the interview portion, you would encounter a screen asking if you used it as a main home. When you answer yes, you can enter the details for the exclusion.

Re: Sell of Rental Property

avahr — Wed, 31 Mar 2021 03:24:54 GMT

I reported it under "Sale of Business Property" and under Rental Properties and Royalties (Sch E).

Under sale of business property it asks for gross proceeds that I don't know what it is.

Under rental I check a box for sold property, and it then asks some questions. I answer to the questions that I only had it rented for a year but it still shows all the gain as income. Not sure where I am doing it wrong

Re: Sell of Rental Property

avahr — Wed, 31 Mar 2021 04:19:26 GMT

Is the cost basis for this house $292k (the original price paid in 2014) or $390k (the market value at the time it was converted to rental)?

I think I should exclude the time it was used as our primary house. Is this correct?

Re: Sell of Rental Property

ColeenD3 — Wed, 31 Mar 2021 14:04:12 GMT

You don't enter it in two places. If you had rental income in 2020 make all your sale entries in the rental section. If you have no rental income, the Schedule E gets deleted and you must make entries in Sale of Business Property.

Delete the bad 4797 and go back through the screens until you encounter the sale of personal home screen.