I sold my rental property (previous home) and my home and bought a new home. The rental property gains were much higher. Can I avoid the taxes on it instead?

[phlow2001]

In 2018 I sold a rental property and my main home, and bought a new home.  I had lived in both the rental property and the previous main home for over 2 years each within the last 5 years, but I made significantly more on the rental property sale.

So I have a couple of questions.

1) Can I avoid tax on the rental property sale, since it was the larger of the two? (within the 250k max) 

2) I have the rental property sale reported in the rental section as a sale of asset. Do I also need to enter it in the Sale of Home area?

3) When calculating expenses on a home sale, do amounts paid to the buyer for things like home warranty's, or covering closing costs all count?

Thanks,

Jay

[phlow2001]

I need follow up guidance please.  See comments.

[JulieR · Accepted solution]

If you lived in the rental for at least 2 of the 5 years preceding its sale, you may choose to treat its sale as the sale of your primary residence and exclude the gain on that sale. You will have to treat your recaptured depreciation as income, however.

If you are choosing to then treat the rental as the sale of your main residence, do not report the sale through the rental section, instead, report it as "sale of home" instead.  You can access this area of your return by typing "sale of home, exclusion" into the search box and clicking on the "Jump to" link. Follow the programs prompts to complete the information about this sale. At some point in the process, the program will ask you to enter the depreciation you've taken on the property.  You'll want to have that information available.

You will treat the sale of your other home as the sale of a second home.

Sales expenses include:

 - commissions
 - appraisal fees
 - broker's fees
 - legal fees
 - advertising fees
 - home inspection reports
 - title insurance
 - transfer taxes or fees
 - geological surveys
 - loan charges (points) or other fees paid on the buyer's behalf

Sales expenses do not include:
 - mortgage payoffs
 - home equity loan payoffs
 - rent-back costs
 - payoff to creditors
 - property taxes
 - homeowner association fees

[phlow2001]

Interesting.  Thanks for that.  So, what then do I do with the residential and other assets for the rental, in the rental section?  Do I still show them as sold/taken out of service?  I have already filled out the rental sale info in the rental section, is the recaptured depreciation listed somewhere in a form or worksheet that I can plug in to the later sale of home area?

[phlow2001]

Not sure if followup questions get the same attention. Would appreciate some guidance on this.