How do I enter a rental property I contributed to a partnership or LLC?

by TurboTax•109• Updated 3 months ago

Real estate investors often contribute rental property when they join a new or existing partnership or limited liability company (LLC) taxed as a partnership. Converting your property into a partner’s share or member’s interest is a two-step process: First, take your property off your Form 1040; then add it to your group’s Form 1065 using TurboTax Business (available for Windows). The partnership will then use Form 8825 to report income and deductible expenses for each property owned by the partnership.

Removing your property from your personal return

To “dispose” of your property in TurboTax, enter it as a sale with no gain or loss. The “sale” price will be the adjusted basis (cost less accumulated depreciation). You’ll also use this same number as (1) the value of your contribution to the partnership, and (2) the basis of the property on the partnership’s return.

For example, if you contributed a $100,000 rental property with accumulated deprecation of $60,000, your adjusted basis would be $40,000.

To report this in TurboTax follow the instructions in “I sold my rental property. How do I report that?”

Add your property to your partnership return

To enter Rental Property for a Partnership in TurboTax Business, select your product and follow the steps.

TurboTax Online

Open TurboTax Business and start or continue your Partnership tax return.
Under Business Info, in About your business and Business description, the Industry should say Real Estate. If not, select Edit for that section, enter Rental Real Estate in the My business does box, and answer the remaining questions about your business.
Select Continue and answer the questions until you get to the Rental Real Estate Property Summary screen.
Enter the details of your property on the Property Type and Location screen, select Continue, check any applicable boxes on the next screen and select Continue.
If you need to add more properties, select Add Another Property. When you're finished, select Done and continue through the screens.
On the Rental Real Estate Net Profit/Loss Summary screen, select Start next to your property to enter your income and expenses.
On the Your Rental Real Estate Income and Expense screen, select Start under the Rental Real Estate Assets (Depreciation) to enter the assets associated with the specific property.
- To enter assets for other properties, you need to select Edit or Start for each separate property so its assets are associated with the right property.
Enter the total value of the property (either the purchase price or the basis of the partner/member contribution if it was contributed) and break out the purchase price or basis of the land specifically, since land doesn't depreciate.

You can select Forms under Tax Tools to search for and review your Form(s) 8825, which details all your income and expenses for each property.

TurboTax Desktop Business for Windows

Open TurboTax Business and start or continue your Partnership tax return.
Under Business Info, in About your business, be sure the Type of business is Rental Real Estate and the Product or service provided is Residential property, Commercial real estate, or Residential and commercial.
Select Continue and answer the questions until you get to the Rental Real Estate Property screen.
Enter the details of your property on the Property Type and Location screen and check any applicable boxes on the next screen. Select Continue.
If you need to add more properties, select Add Another Property. When you're finished, select Done and continue through the screens.
To enter the rental real estate asset (the building and land) go to the Rental Real Estate section under Federal Taxes and select Start to enter your property and its income and expenses.
Select Start under the Rental Real Estate Assets (Depreciation) to enter the assets associated with the specific property.
- To enter assets for other properties, you need to select Edit or Start for each separate property so its assets are associated with the right property.
Enter the total value of the property (either the purchase price or the basis of the partner/member contribution if it was contributed) and break out the purchase price or basis of the land specifically, since land doesn't depreciate.

You can select Forms to review your Form(s) 8825, which details all your income and expenses for each property.