Selling of rental property that had been a primary residence when first purchased

[avriley]

I am boggled by trying to enter in the information correctly and want to make sure I'm doing this right.  I've read and re-read some of these similar posts and still confused.  Any assistance would be helpful.

Initially purchased the condo that I lived in as a primary residence back in 2007 for 144K.  Settlement charges were ~3K.  

Converted the property to a rental in 2012 when the FMV was 119,400 of which the land was assessed at 9700.

Remained as a rental until it was sold in 2020 at a contract price of 127,500.  Closing costs in total were around 9K.  The land value has remained the same at 9700.

There was roughly around 30K of depreciation taken over the rental history.

I want to make sure that the asset information was entered in Turbotax correctly so what should be entered in the Cost and Cost of Land fields when it asks "Tell us about this Rental Asset?"

What gets entered in the Asset price and expense fields?  What gets entered in the Land Price and expense fields?

[Opus 17]

Is this your first time using Turbotax?  Because I would expect that information to carry over if you used Turbotax in the past.

The general principles here are the following:

• If any of your gains is due to depreciation recapture, that has to be taxed first.
• Depreciation on a rental is based on whichever is lower, your cost basis or the FMV when you place it in service.

When you started renting the property in 2012, your basis for depreciation would have been $109,700 (FMV at the time minus the value of the land, because land does not depreciate).  Over 9 years of rental you did (or should have) claimed about $36,000 of depreciation.  That reduces your cost basis from $147,000 to $111,000.  Your selling proceeds were $118,500, so your capital gain is $7,500.  Since all of that gain is from depreciation, it is taxed as ordinary income with a cap of 25%, rather than the lower long term capital gains rate.

Note that not all closing costs are adjustments to basis.  There is a list in publication 523.   So your basis might be less than $111,000 and your proceeds more than $118,500.  

https://www.irs.gov/pub/irs-pdf/p523.pdf

Someone else will have to help you with the data entry because I don't use that section of the program, but that's the outcome you are headed toward.  

Because it has been more than 3 years since you moved out, the fact that it was a primary residence does not save you from any tax consequences of the sale.