topic Sale of rental property in Investors & landlords

Sale of rental property

irongirltx — Wed, 22 Jan 2020 17:21:08 GMT

TT is asking if I sold my rental property this year and I click yes - but it doesn't ask me any questions about sale price, etc. When I enter the information in the sale of business section, it calculates a tax rate of 30% instead of 15%. Have all the forms been updated for rental property?

Re: Sale of rental property

Anonymous_ — Wed, 22 Jan 2020 17:26:05 GMT

@irongirltx wrote:

TT is asking if I sold my rental property this year and I click yes - but it doesn't ask me any questions about sale price, etc.

You need to go through the Sale of Property/Depreciation section (see screenshot).

Re: Sale of rental property

irongirltx — Wed, 22 Jan 2020 17:28:19 GMT

I've completed that section - but it doesn't ask me for the sale price or information from the 1099-S. It's not calculating any gains in that section. Is the section complete yet or are there still more updates pending?

Re: Sale of rental property

Anonymous_ — Wed, 22 Jan 2020 17:39:52 GMT

Are you certain you checked the box indicating that you sold or disposed of the property in 2019 in the Property Profile section??

You then also need to indicate that you sold (or disposed) of the "item" in the Sale of Property/Depreciation section and the date you sold or retired it from use.

Re: Sale of rental property

irongirltx1 — Thu, 23 Jan 2020 22:47:26 GMT

OK - If I say the property has been a rental the entire time owned I get to proceed forward. If I indicate there's been different percentages of business use during the ownership period - it just kicks me out. The property was my main home for 2.5 years before being a rental for 8 years.

So I indicated the percentage of business use was consistent - although it never asked me what the percentage was. I then went thru and entered the information to calculate the gain on the sale - which came out to be $29K. Then it calculated the tax at $7,200! That's a 25% tax rate on a long term capital gain. The only tax rates available on long term gains are 0% (up to income of $51K), 15% (from $51K to $434K) and 20% (over $434K). So how is it calculating at 25% I'm definitely falling in the 15% income level - so what is causing the issue?

It's also saying I have a penalty of $167. Last I knew you didn't have to pay estimated taxes on capital gains. So why is it calculating a penalty?

I've used TT for more years then I want to admit to. This is the first time TT is causing me headaches and not calculating items correctly.

Please help!

Re: Sale of rental property

Anonymous_ — Fri, 24 Jan 2020 00:08:07 GMT

@irongirltx1 wrote:
...Then it calculated the tax at $7,200! That's a 25% tax rate on a long term capital gain.

If you are seeing a 25% tax rate, that would be unrecaptured Section 1250 gain (depreciation recapture) which is taxed at ordinary income tax rates up to a maximum of 25%.

Further, the penalty for underpayment of estimated tax is not limited to a particular class of income, such as only earned income; it applies across the board.

If you want to throw out some numbers (even if they are rough approximations or hypothetical), I can run them through a test return in order to check whether or not there is some sort of program (or entry) error.

Re: Sale of rental property

authur100 — Sun, 16 Feb 2020 02:21:39 GMT

After I entered the update for "Sale of Property/Depreciation", it only asked questions for Depreciation but

never ask for sale questions. Where it asks for sale info ? Please snapshot if you could because I don't think it's available.

Re: Sale of rental property

ColeenD3 — Sun, 16 Feb 2020 15:57:39 GMT

Please see the screenshots below. The first ss is the first time you will be asked if you sold.

Re: Sale of rental property

ColeenD3 — Sun, 16 Feb 2020 16:00:47 GMT

Second screenshot is the second place you will indicate that it is sold.

Re: Sale of rental property

Anonymous_ — Sun, 16 Feb 2020 16:39:33 GMT

@authur100 wrote:

After I entered the update for "Sale of Property/Depreciation", it only asked questions for Depreciation

You also need to indicate the property was sold in the Property Profile section (see @ColeenD3's first screenshot).

Re: Sale of rental property

mseldes — Sun, 16 Feb 2020 21:12:46 GMT

Coleen,

Where is the screen you showed in your reply on the rental sale. I cannot find it. I only see the screen where I indicate the rental was sold in the property profile.

Thanks,

Michael

Re: Sale of rental property

Anonymous_ — Sun, 16 Feb 2020 21:52:18 GMT

@mseldes Those screens should be under Sale of Property/Depreciation if you indicated you sold the property in Property Profile.

Re: Sale of rental property

katcan — Sat, 22 Feb 2020 00:41:11 GMT

I'm having the same issue with no info under the deduction section relating to the sale. I elect no deception and that section is finished. I selected that I sold my rental property, but I cannot find the 2 SS you are referring to under "tell us more about this rental assets." I did not elect that I converted the property this year, should I have to see these questions?

Re: Sale of rental property

KathrynG3 — Sat, 29 Feb 2020 17:11:28 GMT

Try going back through this section and do not elect no depreciation. When selling a rental property, there must be a depreciation calculation.

It would be helpful to have a TurboTax ".tax2019" file that is experiencing this issue. You can send us a “diagnostic” file that has your “numbers” but not your personal information. If you would like to do this, here are the instructions:

On your menu bar at the very top, click “Online” and then “Send Tax File to Agent”. When you click to send, you will get a pop-up with a token number. Reply with the token number and I’ll be able to open a TurboTax Business file with your numbers but not your personal information. That may help diagnose the issue.

Re: Sale of rental property

marcost — Tue, 24 Mar 2020 02:07:57 GMT

Hi KathrynG3,

I have similar issue.

Sold a rental property last December and when trying to input the sale info I get nowhere.

I have never taken depreciation on the property because I bought it for $30,000 and now sold for $159,900.

Of course, I did a lots of work on it and investment on all appliances.

Any help you can provide would be appreciated.

thanks,

marcost

Re: Sale of rental property

AmyC — Tue, 24 Mar 2020 02:26:52 GMT

The IRS requires that you take depreciation. Since you have not taken it in the past, you can fill out one form to claim it for past years, Instructions for Form 3115. You must select depreciation and let the program determine what it should have been on the house.

For the improvements you made, add that to the basis of the house when you reach the sales price.

Basis Example:

purchase $30,000
$15,000 of depreciation should have been taken through the years.
Capital Improvements: $60,000
Basis in property is $30,000-$15,000+$60,000 = $75,000 PLUS expenses of purchase and sale

Appliances are not a capital improvement, replacing those are normal every few years. Here is some information to help you know what counts. Keep records and pictures for 4 years after the sale.

IRS Pub 527 for Rental Property contains the rules. The IRS has a short, online, anonymous quiz to help with your expenses as well, Is My Residential Rental Income Taxable and/or Are My Expenses Deductible?

@marcost

Re: Sale of rental property

glenninma — Fri, 27 Mar 2020 18:57:00 GMT

I am having the same/similar issue. I have a condo that I used for personal use for a few years. For the last many years I have used it as a rental property. In September 2019 I sold the property. In the property profile section I indicated that I have sold the property. I've gone through the "sale of Property/depreciation section". I've indicated that I"ve sold it. I've indicated that the business use of the property varied over the time. BUT, TT never asks me any information about the sales price, etc. Please HELP.

Some further information. I notice that after indicating that I sold the property in the Depreciation section that I do get asked additional sales information if I answer NO to the Special Handling Required Screen.

There should be special handing (I think) because my business use of this property varied over the time that I owned it. How to proceed?

Re: Sale of rental property

Anonymous_ — Fri, 27 Mar 2020 18:13:49 GMT

@glenninma You also need to indicate you sold the property in the Property Profile section.

Re: Sale of rental property

glenninma — Fri, 27 Mar 2020 18:18:30 GMT

yes, I did that as well. I've indicated that I sold the property in the property profile section and in the depreciation area I indicated I sold it and that my business us varied over time. I still asks me no further questions about the sale. It seems other are having the same problem.

Re: Sale of rental property

AmyC — Fri, 27 Mar 2020 19:01:59 GMT

Let's get this right:

Open up your program for this year.
Go to your rental
Revisit/Update
Rental and Royalty Summary screen
Click Edit next to your property
In property profile, continue through to Do Any of These Situations Apply to This Property?
Mark that you sold the property and click continue until you get back to Review your Rental Summary
Look down to Sale of Property/Depreciation, select Update
Do you want to go directly to your asset summary?
Select yes
Your property assets screen
you may have several things listed here, each needs to be disposed of. Let's work on the house. Select Edit
Describe - rental real estate property, continue
Tell us more - residential rental real estate, continue
Tell us about this rental asset:
description - whatever you have had in there for years, continue
Tell Us More About This Rental Asset
Mark that the item was sold and the date
Then mark if it was always business or converted, and the date
continue

Confirm prior year depreciation and continue
Special Handling Required? If it was your main home that was converted to a rental, you have all of the depreciation correct, enter NO. If it was always a rental, enter NO. Otherwise, when you answer yes, you go to different areas of the program depending on your situation and you will need to respond with your special situation.
Home Sale, answer NO
Enter Sales Information