Personal to Rental home and then Sold. Report Sale in Rental or Personal

[user17592014175]

I bought and live in my home in 2011. Converted to rental when I moved out in 2021. Rental ended in June 2024. I prep'ed the house and sold it in Aug 2024 for a gain.

Depreciation was based on the original house purchase adjusted basis and not FMV at the time of conversion.

How do I report the sale. I do qualify for 500K exclusion. 

A. Should I report rental under rental section? Sale under personal.

B. Rental and Sale both under Rental section? But then how do I claim the exclusion

C. Rental. While reporting Sale under rental section, it asks for Sale price for Business portion only. Is that 12.5 % of sale price in my case?  20 months of rental period over 160 months of ownership = 12.5%. The remaining Sale price and basis - should that be now reported in Personal. That is so strange.  None of my forms would match 1099 S value. 

Option A is so much simpler.  But HELP I want to do the right thing. This is on TT Desktop.

[AmeliesUncle]

If it sold at a gain, C.

It is confusing, but for real estate, report 100% for the rental/business portion, and only report it in the rental section. 

I think after entering the sales information, it will ask if it was previously your Main Home, then you will answer those followup questions to determine if you qualify for the $250,000/$500,000 exclusion.  I don't know all of your circumstances, but if you bought the home in 2021 and only lived in it in 2021, you don't seem to qualify for the exclusion.

Even *IF* you qualify for the exclusion, you there will be taxable gain due to the depreciation that you were eligible to take (that part does not qualify for be excluded).

[user17592014175]

Thank you @AmeliesUncle . I will give it a try and see if it asks if it was my main home. 

Also, the home was bought in 2011 (not 2021). We lived in it till 2021 and then converted to rental.

[AmeliesUncle]

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@user17592014175 wrote:

Also, the home was bought in 2011 (not 2021). We lived in it till 2021 and then converted to rental.

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Ah, I seem to have missed 10 years.  LOL.  Sorry for my misreading.

[user17592014175]

So, going with option @AmeliesUncle suggested, it seems to be working and it did ask if this was the Main home and doing the 500k deduction. However, I am hitting another issue.

On the pages where it asks - the asset cost and land cost & asset sale price and land sale - what needs to be entered?

I assumed it wants to separate out the building and land - cost/basis, sale and expenses. If I separated everything and entered it. For some reason, TT doesn't subtract the building cost/basis from building sale price - thus showing me a bigger gain than I have.  

If I ignore Land values and enter everything combined under asset. It calculates gain correctly but seems to mess up and increase the depreciation for the current year.