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Reporting a sale of home with business use in Lacerte

by Intuit Updated 2 years ago

If your client sold a home that they also used for business, the sale is considered a single transaction, rather than separate sales of business and personal property. Because the client can take depreciation the portion of the property used for business, the sale is subject to depreciation recapture.

There are two methods of entering the sale. If you enter the sale on the Depreciation screen, you can do a bulk sale with the home as the main asset. Alternatively, you can enter the sale on Dispositions screen, but would not be able to do a bulk sale.

Follow these steps to enter the sale on the Depreciation screen:

  1. Go to Screen 22, Depreciation.
  2. Select the main asset from the left Asset menu or top grid.
  3. Scroll down to the General Disposition Information section.
  4. Enter the Date sold, disposed, or retired (MANDATORY).
  5. Under the Sale of Asset (4797/6252) section, enter the Sales price (-1=none).
  6. Scroll down to the Sale of Home section.
  7. Complete the applicable fields with information about the home sale:
    • Sale of home (MANDATORY to compute exclusion) 
    • 2-year use test met (full exclusion)
    • Home acquired in a like-kind exchange
    • First time homebuyer credit previously taken on this home (Ctrl+T)
    • Number of nonqualifed use days after December 31, 2008
    • Depreciation allowed after May 6, 1997 [Override for homes placed in service after May 6, 1997]
  8. Complete the applicable fields in the Reduced Exclusion subsection.

If you want to link additional assets, such as improvements and land, to the sale, select the asset from the left Assets menu or top grid and go to the General Disposition Information section. Enter the Date sold, disposed, or retired (MANDATORY), and then select the home in Bulk sale (multi-asset disposition: select the asset containing disposition amounts (Ctrl+T).  

  1. Go to the Forms tab.
  2. Review the information on Form 4797.
  1. Go to Screen 17, Dispositions.
  2. Enter the Description of Property, Date Acquired, and Date Sold.
  3. Under Sales Price, enter the full amount of the sale (not just the home), include land, improvements, any other assets associated with the business use of this home.
  4. Under Cost or Basis, enter the total basis for all of the assets.
  5. Enter any Expense of Sale.
  6. Go to the section titled Form 4797.
  7. Enter the depreciation allowed for all assets under Depreciation Allowed (-1=none, triggers 4797) (code 30)
  8. Go to the section titled Sale of Home.
  9. Check the applicable boxes, ie: Sale of home (Mandatory to compute exclusion) and 2-year test met (full exclusion).
  10. Check the box titled Business use in year of sale.

Refer to Pub 587 for more information on business use of homes.  

Lacerte Tax

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