Sale of Mixed Use Rental / Vacation Home

[jim5917]

Taxpayer rented out their vacation home about 33% of the year then sold it at the end of the year for a gain. How do I report this? 33% business use on the asset entry sheet along with 33% of the sale price and expenses and let that flow to 4797 along with the depreciation recapture? Then the other 67% (Proceeds and selling expenses) directly on Schedule D?

And does it matter if it wasn't a 33% split the previous tax years?

[TaxGuyBill]

If it was non-real estate, yes, divide it up based on the AVERAGE percentage.

However, for real estate, one of the IRS Publications or Instructions indicate to put the entire thing on 4797.  Offhand, I don't remember where it said that.

[BobKamman]

Was this the only year of rental, or has it always been that way?  Was there really a profit motive to the rental?  I would look for a way to put it on Schedule D.  

[jim5917]

Owned for parts of 3 years and sch E for 3 (including 2023). It was always 'intended' to be a rental as far as I knew. They ended up using it a lot as well. 

[jim5917]

It is residential real estate. My initial thought was all on 4797. I ran a scenario and it may be a benefit to them to split it - I wanted to get some guidance before diving too deep into that though