Capital Gains

misters#ulo

I mistakenly filed an inherited rental that I sold on a land contract under property sold and is showing the full amount as capital gains. I sold the property on a land contract for the same amount as the inherited appraisal. Now I can't go back and change how it's claimed on my taxes showing me a large amount of money owed. How can I change this?

PhillipB

Hello,

It looks like you have reported the sale of a rental property with no cost basis. It looks like you may have inherited the rental property while there were still tenants in the home, and so you ended up with a few months of rental income before you could sale the home.

If this is the case, there are a few things that you need to change:

1. Go to Rental Income (Schedule E) > Edit on the rental property > Edit on Depreciable Assets
2. On the screen labeled "Tell us about your asset" change the date placed in service to the date that you inherited the property in 2024. You also need to change the Business use percentage to 100% (this is the case if the property was being rented at the time immediately before it was sold).
3. Continue through the rest of the screens and the sale you have already entered should change to a zero dollar capital gains or a slight loss. The problem on the first go around is that you had entered zero business percentage, this makes it so the basis is not deductible.

The other way to report this is to claim the rental income as other income, and then to report the sale of the rental property as a capital gain in the same section where you report the sale of stocks and other securities. However, with the way things are being reported right now, use the steps above to correct the sale of the property.

Let us know if there are additional questions or concerns.