Sold my rental property - Where do I report it?

[whyme940]

We lived in the house for 10 years then moved, and have been renting it for the last 17 years.  It was sold 2/2022.

Do I report this under the Rental Properties section or the Investment Income section using the 1099-S I received?   Working thru TT, I came to the Rental Section first and added it there.  Then TT went to the Investment Income Section and asked if I had a 1099-S so I also entered the info there - that caused everything to double!  Does it matter which I use?  Do I have to use a specific one, or is it ok to pick one or the other?  

Thanks in advance!

[Critter-3]

You will ONLY report it as a rental sale ... you will sell off all the assests that should have been depreciating all these years.  Do NOT enter it anywhere else.  

See this TurboTax support FAQ for the sale of a rental property - https://ttlc.intuit.com/turbotax-support/en-us/help-article/real-property/sold-rental-property-repor...

[PattiF]

You do not need to enter this in the investment section. The 1099-S needs to be reported in the return and the best spot in your tax return was for the rental that you sold. 

[Critter-3]

Actually you do NOT enter the 1099-S anywhere in the program ... only the sales date and amount is entered in the asset section when you sell them.  Don't look for a 1099-S entry screen or you will be looking forever ... follow the sale of assets thread in the Sch E section ... go slow and read carefully.

[whyme940]

From what I am reading in the FAQ's and questions from other people on the subject I think I have a problem!  We lived in the house for 10 years then had to move due to job situation.  First rental was in 2008.  When filing taxes, used purchase price $107K as cost basis without taking into account improvements $50k we had made (room added, patio added, new roof, new windows.....).  If I'm reading all the info correctly I will have to file a 3115 to adjust for that info, and it can't be done on TT.  Looks like I'll have to go to a tax professional this year :(

[MarilynG1]

On your 2022 return, in the Rental section, report that you 'converted it to personal use' as of 12/31/2022 (or whenever the last renter moved out). This will stop depreciation and give you an amount for 'Accumulated Depreciation' (keep record of that amount). 

Then, on your 2023 return, report the sale on 02/2023 under 'Sale of Business Property'.   Here you will enter Sales Price, Cost Basis, Sales Expenses, Accumulated Depreciation.  You can enter a Cost Basis that includes the 50K renovations you did to the home prior to renting it.  Although you should have included this amount in the Cost Basis when you set up the Rental Property,  it's problematic to change that now with Form 3115. You will enter your 1099-S here. 

Be sure to keep good records of the 50K improvements you added to the cost basis.  Since many folks make improvements to a rental home prior to sale, the addition to the Cost Basis shouldn't raise a red flag at the IRS.

Or, since you actually sold the house in 2023, you could enter both these areas on your 2023 return, especially if your 1099-S is dated 2023. 

Here's more info on Sale of Business Property. 

[whyme940]

Thank you so much for answering, and also for mentioning the year - that is when I realized I had a typo!  House sold 2/2022, NOT 2023!  Final renter move out was 12/31/21, house was sold 2/4/2022.  When I filed 2021 taxes I did all rental stuff, so I have no rental info to report this year. 

With that new important bit of information (!!!!) would your advice still hold true?  Convert to personal use as of 12/31/2021 and "report the sale on 02/2023 under 'Sale of Business Property'.   Here you will enter Sales Price, Cost Basis, Sales Expenses, Accumulated Depreciation.  You can enter a Cost Basis that includes the 50K renovations you did to the home prior to renting it".  If so, Sale of Business Property is not in the rental section, correct?   Is that in the investment income section where the 1009-S is entered?  So I can totally skip the rental section, not even open it?!?!?

[GeorgeM777]

Yes, to follow-up on the advice from @marilynjoy, the previous advice remains true for tax year 2022.  Yes, the Sale of Business Property is not in the Rental Property section.  In TurboTax online, Sale of Business Property is under the heading Other Business Situations, all of which you can access from the Your income and expenses screen.  Just select Wages & Income in the left margin and you will see Your income and expenses screen.  Scroll down the screen to Other Business Situations and click on the drop-down arrow if necessary to reveal the options.  

Yes, based on what you have stated, you can skip the Rental Property section; however, you may need to refer to it when calculating your cost basis, depreciation taken, etc. in connection with the sale of the rental property.  

In TurboTax Home & Business, the process to enter the sale of business property is similar to the process in TurboTax online; however, you select the Business tab, and then scroll down the screen to Less Common Business Situations.  Then select Sale of Business Property. 

@whyme940 

[whyme940]

Thanks so much for clarifying!  I am working my way thru, and of course a few more issues popped up!  As stated, we sold the house/rental property 2/4/22 (tenants last day 12/31/21):

 - Had carry over passive loss and Alt Min Tax to claim...... do I lump this in w/ sales expenses?  Or do I need to go to the rental section to complete these items?

 - Received the annual 1098 and have mortgage interest $$$ to be reported (no real estate $$$).  Normally I would enter the 1098 in the rental section?  Would it now be entered when I do the 1098 for my primary home, or lump this in w/ other sales expenses for the adjusted cost basis? 

 - On our settlement statement we have $$$ property taxes  - include that w/ the other sales expenses or would it go in a special area?

Thanking you in advance for your help with this!!

[Critter-3]

Here is the trick ... if you have had a Sch E for the rental in the prior years  and have been depreciating the property as required  then you will continue using the Sch E for 2022 ... to keep the program from deleting the Sch E enter ONE day of rental use when asked and ZERO personal use days.   Then simply follow the interview screens to enter any holding expenses (interest/RE taxes/insurance/utilities/repairs)    and   indicate the  property was sold  and sell off all the assets listed.  Go SLOW and read all of the screens ... do not skip about or you will miss something important.  But most important you will ONLY report the sale in the Sch E section and nowhere else. 

[whyme940]

I have filed a Schedule E for the last 10+ years on this house.  The problem is that when I initially made this a rental property I didn't understand the cost basis and used the cost of the house without including the $50k+ improvements.  In order to claim them I have been told I would have to complete form 3115 (I might have that wrong) in order to fix the depreciation amount.

[Critter-3]

@whyme940 

The form 3115 is not a DIY situation so I highly recommend you seek local professional assistance for this tax year  OR   upgrade to one of the LIVE versions if you use the online TT program.