Sold my rental property but tax software never asks for sales price - capital gains reporting?

I finally sold my rental property after owning it for about 7.5 years, and now I'm trying to figure out the tax implications. I've been claiming depreciation each year as required, but now I'm confused about reporting the sale. The property appreciated quite a bit during the time I owned it, but my tax software (using TurboTax) doesn't seem to be asking me for the actual sales price anywhere during the filing process. Shouldn't the sale price be a critical piece of information? Don't I have some tax liability for the capital gains over those years? I'm worried I'm missing something important here. The difference between what I paid and what I sold it for is around $95,000, plus I need to account for all those years of depreciation I claimed. Has anyone dealt with this before? Am I just not getting to the right section in the software, or is there a separate form I should be using? This is the first investment property I've ever sold and I want to make sure I'm reporting everything correctly.

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18 comments

Zoe Stavros

•8M

You're right to be concerned! The sales price is absolutely critical information for reporting the sale of a rental property. The software should definitely be asking for this - you're probably just not at the right section yet. When you sell a rental property, you need to report it on Form 4797 (Sale of Business Property) and potentially Schedule D (Capital Gains and Losses). The tax software should walk you through entering the original purchase price, improvements, depreciation taken, and the final sales price. This information is used to calculate your gain, which will be taxed in two different ways: the portion attributed to depreciation will be taxed as "depreciation recapture" (up to 25%), and the rest as capital gains. Make sure you're in the section for selling rental/investment property, not just regular income. If you're using TurboTax, look for a section called "Business" or "Rental Property" and then find something like "Sale of Investment Property" or "I sold a rental property.

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Zoe Stavros

•8M

Yes, improvements absolutely get added to your cost basis! This is a key point many people miss. Any capital improvements (not regular repairs and maintenance) increase your basis, which reduces your capital gain when you sell. Examples include adding a room, replacing the roof, major renovations, etc. Regular repairs and maintenance are expenses you deduct in the year you pay them, but capital improvements are added to your basis. So yes, properly documented improvements will reduce your capital gains tax liability when you sell.

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Mei Chen

•8M

I went through this exact situation last year and was confused by the tax software too. I ended up using https://taxr.ai to help me figure out what forms I needed and where to enter everything. They analyzed my previous tax returns and rental documents and showed me exactly where to report the sale in TurboTax. The issue is that most tax software buries the rental property sale section deep in the investment or business areas. With taxr.ai, I uploaded my closing documents and previous returns, and they showed me exactly what sections to navigate to. Saved me a ton of headache and probably thousands in potential mistakes.

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Mei Chen

•8M

They processed my documents in about 2 hours, which was way faster than I expected. I submitted everything in the evening and had my analysis by the next morning. Even if you're close to the deadline, they should have plenty of time to help. It absolutely works with other tax software too. I know people who've used it with H&R Block and FreeTaxUSA. They provide specific navigation paths for whichever software you're using, and the underlying tax forms are the same regardless of which program you use.

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Amara Okafor

•8M

Just wanted to follow up - I tried taxr.ai after my earlier question and it was a huge help! I uploaded my closing statement from the property sale and my previous year's tax return, and they gave me a detailed breakdown of exactly where to enter everything in H&R Block. They explained that I needed to use Form 4797 for the depreciation recapture portion and Schedule D for the capital gains portion. The software was asking for the information, but it was buried under "Business Property" rather than "Real Estate" where I was looking. They even calculated my adjusted basis including the improvements I'd made over the years, which I wasn't tracking very well. Definitely worth checking out if you're stuck!

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CosmicCommander

•8M

I had a similar problem when I sold my rental last year, but my issue was getting through to the IRS to confirm I was doing it right. I called for WEEKS and couldn't get anyone on the phone. Finally tried https://claimyr.com and got through to an IRS agent in about 20 minutes. You can see how it works here: https://youtu.be/_kiP6q8DX5c The IRS agent confirmed I needed to fill out Form 4797 for the business portion of the sale and that I needed to recapture all the depreciation I'd taken over the years (even if I hadn't actually claimed it!). They also helped me understand how to report the capital improvements I'd made. Honestly saved me from a potential audit situation.

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CosmicCommander

•8M

It's not about getting to the front of the line - they use an automated system that continuously calls the IRS and navigates the phone tree for you. Once they reach a point where you can be connected to an agent, they call you and connect you. It saves you from having to wait on hold for hours or repeatedly calling back. It's completely legitimate. I was skeptical too, but after spending weeks trying to get through myself, I was desperate. It works because most people give up after being on hold for a long time, but their system doesn't get frustrated and hang up.

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Fatima Al-Qasimi

•8M

I take back everything I said. I tried Claimyr after posting my skeptical comment, and I'm shocked that it actually worked. I've been trying to reach the IRS for THREE MONTHS about a rental property sale issue similar to the original poster's situation. The service called me back in about 45 minutes (was quoted 1-2 hours), and I was connected directly to an IRS representative. She walked me through exactly how to report my rental property sale, explained the depreciation recapture rules, and even helped me understand how the $250k/$500k primary residence exclusion doesn't apply to rental properties. Turns out I was about to make a major mistake on my taxes. Won't hesitate to use this again next time I need to actually speak to someone at the IRS.

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Dylan Cooper

•8M

Remember that when you sell a rental property, you'll be dealing with three potential types of taxes: 1. Depreciation recapture (taxed at 25% for most people) 2. Long-term capital gains if you owned it over a year (0%, 15%, or 20% depending on income) 3. Net Investment Income Tax of 3.8% if your income is high enough Make sure your software accounts for all three. It's not just about the sale price vs. purchase price - it's about adjusted basis, which includes purchase price + improvements - depreciation taken.

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Dylan Cooper

•8M

That's a great question! If you lived in the property for at least 2 of the 5 years before selling, you may qualify for a partial exclusion of gain under the primary residence rules (up to $250k single/$500k married). For the period it was a rental, you'll still face depreciation recapture on the depreciation you claimed or should have claimed. The IRS has a specific calculation for properties that were both primary residences and rentals. You'll allocate the gain between the periods, and only the rental period portion is fully taxable (minus any qualified exclusion). IRS Publication 523 covers this in detail.

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