How to report rental property sale by TurboTax - Is there a step-by-step instruction ?

[A320drvr]

When you added the sale in the depreciation section did you prorate the  asset sale price 

land cost for the percentage it was used as a rental ?

[DiddlyD]

I recommend researching topics using google not forums to understand what's involved in reporting the sale of a rental property and making notes to understand what the different components involved are.  First is the question of is it a long term investment or short term (held 1 year or longer) because different rules apply.  Was this a business or investment sale, etc.  I can talk to only the sale of a long term investment property Sch. E, which you should have taken depreciation on over the year(s).  Depreciation in this case is only ever on the building portion of the purchase price spread out over 27 years (not the land  because land does not get old).  I had a CPA figure that part out for me the first year and do my taxes, then I took over once it was established.  Then once you sell, you will have capital gains probably on the gain (difference between purchase price and sale price minus allowable deductions like real estate fees), but separately the government now wants the tax right offs of depreciation you took over the years paid back to them, so you need to know how much depreciation you took, which should be in your prior tax program you imported if you used Turbo last year too, otherwise you must enter  the total you took over the years you had the investment, but look out here's the caughter "whether or not you took the depreciation but could have according to the IRS".   If you used Turbo tax last year, this should be figured out for you although I would make sure it is correct, it gets buggy some times.  Good luck!

[AmyC]

No. A personal residence only has preferential treatment for 2 years, otherwise, it is capital gain. The rental property was placed in service after being personal use so all of the house and land was rental property the last -14 years, I believe. The big concern for you is not percentage used as personal, that is irrelevant. What matters is what happened  when you made the conversion. 

Did you use your basis or was the FMV lower when you switched to rental use? 

• If you used your basis, then there are no actual adjustments to make for the program to properly calculate the gain.
• If FMV was lower than your basis, you will need to adjust the cost basis to capture the extra basis that could not be depreciated.

See Publication 551 (12/2022), Basis of Assets - IRS

@A320drvr 

[DiddlyD]

The language you are using is confusing!

1. To be exempt from capital gains a home you converted to a rental has to pass the test of occupancy which is "it had to be your primary resident for 3 years out of the last 5 years prior to the sale"!

if it doesn't pass, then you lose the special exemption for personal residence period and upon the sale will have to treat as if it never was your residence the whole exemption is lost you don't get part of it before you converted it to a rental and the basis in the property to determine capital gains, starts with what you originally bought the property for.  

2. Depreciation of a rental property does not include the land, you can only depreciate the building and that should have been determined when you first started or should have started depreciating on your taxes the first year you reported it on your taxes as a rental; that is where you should look for the amount and like i said if you had been using TT the entire time, it should import that information for you and calculate the recapture of depreciation that occurs upon the sale for you.