Sale of Rental Property Help!

[billyocean23]

We purchased a condo in 2016 as a primary residence, and in the summer of 2018 moved away and started renting the property out starting in July of 2018.  We recently sold the property in August of 2024 and I am a little confused and want to make sure I'm entering the proper numbers in the section in the Rental Property section of turbo tax.

We initially bought the property in 2016 for $363,000.  The land value at that time was $75,000.  We sold our rental property for $490,000 and the land value is now at $145,000.  We paid about $26,000 in expenses (including closing costs) to sell the property.

In the section where it asks for 4 values:  Asset Sales Price = , Asset Sales Expenses = , Land Sales Price = , and Land Sales Expenses = , I want to make sure we put the proper information.

We put $26,575 for the Asset Sales Expenses, and put 0 for Land Sales Expenses, but for the Asset Sales Price and the Land Sales Price, how do we calculate that?  Are we putting the total price of the condo at $490,000 as the sales price, and the full amount for the Land Sales Expenses at $145,000?  I'm reading some people are putting 75% for the cost of the Asset Sales Expenses and Land Sales Price, how do we calculate the proper numbers?

[DianeW777]

Report the sale of your condo under your rental activity. 

1. Under Income select your Rental Income > Edit > Continue to the screen 'Tell Us More About This Rental Asset'. 
2. Select that you purchased it, also the item was sold, retired, ...., etc. > 
3. Yes always used 100% for business if there was no personal use during ownership since the rental activity began.
4. See more details below.

If you had any losses that were not allowed in prior years and were carried over because of your income level, all losses are allowed in the year of sale and do not get included in your sale figures. TurboTax will know this information if you entered any passive unallowed losses from 2023.  When you select to Edit next to your rental property, scroll to Less Common Situations to review any carryover losses (from Form 8582 in your 2023 tax return ). TurboTax should carryover this loss automatically, so confirm, if this applies to you.

To figure out the selling price for each asset:

Use the original cost of each asset listed on depreciation, add those together then divide each one by the combined total to find the percentage of the cost for each asset.  Use that percentage times the sales price and sales expenses to find the selling price/sales expenses for each asset. (Choices would also be fair market value on the date of the sale or adjusted basis on the date of the sale, which is cost less depreciation.)

Example:  Original Cost (of each asset on your depreciation schedule)

$10,000 Land                = 13.33% 

$50,000 House              = 66.67%

$15,000 Improvements  = 20%

$75,000 Total                 = 100%

Multiply each percentage times the sales price/sales expenses to arrive at each individual sales price/sales expense.

You need to dispose of the property by telling TurboTax how and when it was disposed of.  Follow the instructions below.

1. Under Rent and Royalty Summary, click Edit
2. Click Update to the right of Assets/Depreciation.
3. Do you want to go directly to your asset summary?, click Yes and Continue
4. Click Edit to the right of each asset to be disposed of/sold
5. Go through several screens until you get to Tell Us More About This Rental Asset
6. Click on This item was sold…….   And continue to answer the questions

You might also review information here.

[billyocean23]

Thank you for your response.  So our initial purchase price of the condo was $363,000, and the land value at that time was $75,000.

We put about $6000 in improvements over the course of owning the property.

Our closing costs were app. $20,000.

We sold our condo for $490,000, with a land value of $145,000 at the time of sale.

Can you help with the calculations with these numbers?  Thanks.

[billyocean23]

Hi, so based on the information provided I ended up with these numbers:

Originial cost of condo = $363,000, Initial Land Value = $75,000

75,000/363,000 = 21%

House Value = 79%

Given these values,

Sale price of Condo = $490,000

Asset Sales price = (490,000 x .790) = $387,000

Land Value = (490,000 x .21) = 102,900

Total = $490,000

Hopefully these are the accurate numbers.  Thanks.

[PatriciaV]

Your calculation method seems appropriate. If you are satisfied with the results, you should be able to enter this property sale in TurboTax with no problems.

[billyocean23]

Great thank you so much