What forms do I use for sale of residential rental property?

I always recommend seeking professional help when starting or selling a rental.

Yes, you will need the accumulated depreciation, and it transfers to form 4797. I'll also say form 4797 looks deceptively simple yet generates a very large error rate. It's just so easy to get wrong.

Keep track of each class of property -- Sec 1250 structure, Sec 1231 land, sec 1245 appliances, etc. They go to different parts of the 4797 and if you are selling appliances as part of the sale, I would argue their portion of the sales price corresponds to their adjusted cost basis, meaning no gain or loss for those items. But be sure to allocate sales price amomg each class of property.

If the rental was still in service during this year, keep on depreciating and filing a schedule E

There might be a Pub on selling rental property but I can't come up with one off the top of my head.

Good luck.

Good advice.

Also check for passive loss carryovers. Keep track of expense of sale. Check for any depreciation adjustments for your state or AMT.

-Mark Bole

Thanks Art and Mark.

Form 4797 was the form I was thinking of. Good point about treating the appliances separately. There is only a stove as I remember. I think the property is about a wash compared to their original cost, so the depreciation will be the strongest influence on the capital gains. But, they have had it for 10 years, so all of us will be glad to be rid of it and the problems of dealing with tenants who are 3.5 hours away and who rarely pay the rent on time. Expenses of sale will be appreciable as we have had to do a lot of "things" to enhance the property to sell it in the current market.

Things you did to enhance the property are not necessarily expenses. If they were improvements, they have to be depreciated, just like the appliances. If they were repairs, then they are deductible as immediate expenses.

No fridge?

When you say the property is a wash, do you mean the original purchase price and sale price are the same, without regards to depreciation? Some people say the cost basis is the original purchase price minus the depreciation taken over the years, which would mean if you bought the property for 100k and sold it for 100k you still have a gain.