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Reporting a sale of home on an individual return in Lacerte

SOLVEDby IntuitLacerte Tax457Updated March 31, 2022

This article will help you enter a sale of home under a variety of circumstances and understand where the sale gets reported. Follow the steps for your client's situation below.

  1. Go to Screen 17, Dispositions
  2. Enter the sale information in the grid:
    • Description of Property
    • Date Acquired
    • Date Sold
    • Sales Price
    • Cost or Basis
    • Expense of Sale (if applicable)
  3. Scroll down to the Sale of Home section
  4. Check the box labeled Sale of home (MANDATORY to compute exclusion)
  5. Check the 2 year use test met (full exclusion) box
  1. Go to Screen 17, Dispositions
  2. Enter the sale information in the grid:
    • Description of Property
    • Date Acquired
    • Date Sold
    • Sales Price
    • Cost or Basis
    • Expense of Sale (if applicable)
  3. Scroll down to the Sale of Home section
  4. Check the box labeled Sale of Home (MANDATORY to compute exclusion)
  5. Check the box Sale due to change in health, employment or unforeseen circumstances
    • This box must be checked to calculate the reduced exclusion. For more information, see IRS Publication 523.
  6. Enter the number of days the taxpayer used the property as a main home in Days Used as Main Home
  7. Enter the Days Property Owned
  8. Under Business Use, enter the Number of nonqualified use days after December 31, 2008, if any. Nonqualified use typically includes any time the home wasn't used as a principal residence.

IRS regulations indicate that if the residential and non-residential sections are within the same dwelling unit (such as an office in the home), and no depreciation is claimed, Reg. 1.121-1(e)(1) doesn't apply.

If Reg. 1.121-1(e)(1) doesn’t apply, you’ll need to enter the sale as two separate transactions:

  1. Divide the sales price, selling expenses, cost basis, and maximum exclusion between the part of the home used for personal purposes and the part used for business or rental.
  2. Go to Screen 17, Dispositions.
  3. Create a property for the personal part of the home:
    1. Enter the sale details for the personal part.
    2. Under the Sale of Home section, check the box for Sale of Home.
    3. Enter the amount of exclusion allocated in Exclusion (-1 to recognize full gain)[O].
  4. Create a second property for the business/rental part of the home:
    1. Enter the sale details for the personal section.
    2. Scroll down to the Form 4797 section.
    3. Enter the amount of Depreciation allowed (-1 if none, triggers 4797).
    4. Under the Sale of Home section, check the box for Sale of Home.
    5. Check the box for Business use in year of sale.
    6. Enter the amount of Depreciation allowed after May 6, 1997.
    7. Enter the amount of exclusion allocated in Exclusion (-1 to recognize full gain)[O].

If Reg. 1.121-1(e)(1) applies to your client, follow the steps for a Sale of home with no depreciation or business use, above.

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