Where to enter selling expenses when selling a rental property

You can find selling expenses on the Sales of Business or Rental Property screen in TurboTax.   Search for sale of rental property and use the Jump to sale of rental property link to be taken directly to that screen.   Follow the steps in this Help Article to report the sale of rental property.  

I have TT Home & Business 2024 and when I follow the steps in the rental section, checking that I sold the property in 2024, it does not take me to this sales screen you show in the asset / depreciation section.   Earlier this year I received a note from Intuit that this functionality wasn't available and I would be contacted when it was enabled in the program updates.   

Can someone help with where I can find this in the rental section of Home & Business or tell me when this functionality will be available?

I just went through the whole process to make sure it works. Follow these steps:

1. Go into your assets/depreciation section. 
2. Do you want to go to your summary? Yes
3. You will see all assets listed. The rental house and everything connected to it will need to be gone through and disposed of.
4. Select Edit next to the house
5. continue through until you reach, Tell Us More About This Rental Asset
6. Select the item was sold, enter the date sold
7. Answer the business percentage question, continue
8. confirm prior depreciation
9. Special Handling? if none, select No
10. Was it main home? select No
11. Enter the sales information for the house.

Go through this process with each asset and sell them for zero. For example, refrigerator you have been depreciating was sold with the house at no extra cost.

@hhooper3 

Thank you.  That put me in the right area to do what I need.   Not sure why I was struggling to find it.   You helped me greatly.

How do I 

1. Go into your assets/depreciation section?

In TurboTax Desktop Home & Business, follow these steps:

• Across the top of the screen, select Business.
• Across the top of the screen, select Business income and Expenses.
• Select I'll choose what I work on.
• At the screen Let's gather your business info, click to the right of Rental Properties and Royalties.
• At the screen Income from Rentals or Royalty Property You Own. click Yes.
• At the screen Rental and royalty Summary, click Edit for the rental activity.
• At the screen Review your Rental Summary, Assets/Depreciation is listed below.

@californiakk 

I sold my rental house 4 months into 2024. Should I include the 2024 Depreciation in the "Depreciation Taken on This Property" number or does this get taken care of by TurboTax?

If you are reporting the sale within the Rental Property topic and the asset has been entered for depreciation, TurboTax will calculate the appropriate depreciation expense for the period before the sale.

To check that the correct amount of accumulated depreciation is reported for the sale, look for the Depreciation Report (a worksheet in your tax return). The total depreciation to be taken for the sale is the sum of prior and current depreciation for the asset on that report.

To see this report, follow these instructions: How do I get a PDF of my return?

Hi @PatriciaV,

Thanks for your reply!

The Depreciation for the 4 months in 2024 that I still owned the property is showing up on Schedule E, line 18.

When I enter the information for Form 4797, there is a box for (e) Depreciation allowed or allowable since acquisition. My question is whether or not the amount in that box should include the amount on Schedule E for 18 - Depreciation expense or depletion.

When I look at the Form 4562, the rental home asset isn't showing up at all, just the business mileage I input for my truck.

Maybe this has to do with the fact that I originally lived in the home, then rented it out?

I also have passive activity losses. I don't see that those are being brought in anywhere? Should those cancel out some of the accumulated depreciation?

Thoughts?

Yes, include all depreciation up to the date of the sale.

You may have two depreciation reports - one for Schedule C and the other for Schedule E. The rental assets would appear on the Schedule E report when you have current year depreciation.

@PatriciaV I also have passive activity losses from the previous years that have carried over. I don't see that those are being brought in anywhere? Should those cancel out some of the accumulated depreciation?

Yes, the passive activity losses will be used on your tax return in the year of the sale of the rental property. This will help to reduce your taxable income on your tax return.  See details below.

Passive Activity Loss Entry:

Assuming your passive losses were carried over each year, this will be a separate and identifiable entry which will carry to the Schedule E.  The full remainder of passive loss carryover is used in the year of sale as an expense. This is combined with your overall rental gain or loss to your Form 1040. 

• When you are on the screen 'Do any of these situations apply to this property?' (Property Profile section), be sure to check the box under Carryovers. 
• See my notes below on entering the sales price/expenses for each asset inside the rental activity.

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

1. Click on Search (upper right) > type rentals > Enter > click Jump to .... link (or click the first FAQ and click Go to rentals)
2. Answer the questions and on under Rent and Royalty Summary, click Edit
3. Click Update to the right of Assets/Depreciation.
4. Click Edit to the right of each asset to be disposed of
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.

Example of arriving at the selling price and sales expenses for each asset in your rental activity.

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.

@David Wip

@DianeW777 Thanks for the great info. I now see where the passive losses are balancing against some other income on Schedule 1.

I'm still a bit stuck on the "Sold rental property" portion. When I go through the interview for the Asset, when I get to the question: "Special Handling Required?" I'm answer "Yes" since "the business use percentage of the property varied during the years I owned it" (I was living in the home for 5 months back in 2022). I'm wondering if I should be checking that box since on my 2022 tax return, I indicated a personal use of 58%, which I believe prorated the depreciation? Because I'm answering the "Yes", the "Original Cost (of each asset on your depreciation schedule)" screen doesn't come up.

Should I be answering "No" and fill out the information you described? If so, any advice on calculating the allocation of sales expenses between the Asset and Land? Should I take the Total Sales Price/Original Purchase price and apportion the gain to both the Asset and the Land? Then apportion the sales expenses based on the ratio between the Asset and the Land values?

Yes, you should select 'no'. Once you converted the property to rental in 2022, and if it was 100% rental activity after your move out date, you do not need to select 'Special Handling'.  The depreciation will be accurate and you can continue with the instructions provided above.

@David Wip