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sale of a rental property, is there a form to see to work on the tax implications

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Employee Tax Expert

sale of a rental property, is there a form to see to work on the tax implications

I am assuming you are looking at selling in 2022 and you have already filed your 2021 tax return.

One way is to save a .tax file of your 2021 return.  Now you have a data file of your tax return as filed (this is important if you have to amend 2021 some time in the future).  Now you can "what if" with the 2021 online software and go through the sale of rental screens.  Your depreciation recapture will not be precise because you will claim depreciation up to the date of sale.  So assuming you do not have big changes in W-2 income and investment income in 2022 as compared to 2021, you should be able to get a sense of how depreciation recapture on the rental and the capital gain will flow through the tax return.  Generally, taxpayers have gains on rentals held for a significant period of time as a result of the rising home prices in many areas of the country.  The program will calculate the gain on the structure (the part of the rental you have been claiming depreciation on) and the gain on the land.  You will need to allocate the sales price and selling expenses between the structure and the land.

The way I prefer to look at these scenarios is buy a download of the appropriate 2021 TurboTax desktop software (full disclosure:  I work for Intuit, which is a great place to work!).  Then you load the .tax file into your desktop software and the world is your oyster!  You can "save as" and run different gross sales price cases and double check everything in Forms mode (in other words, follow the numbers on the IRS forms).  Since the sale of rental can involve hundreds of thousands and the tax implications can be many thousands, I view the additional expense as worth it.

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