Question

Depreciation and rental property sale

Forum|Forum|3 years ago
April 9, 2023
1 reply
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I sold a duplex rental property on Jan 5, 2022. From Jan 1-4, I bought new refrigerators, dishwashers, stoves, replaced rugs/floor prior to sale totalling $5,960. When I go through the Turbo Tax steps, it brings me to the depreciation section. Can I take the Section 179 full deduction? If not, where do I report these deductions?

J

JamesG1

Given the dollar amounts that you specify, you may be able to report the expenditures as Improvements, furnishings and other assets which cost $2,500 or less and may be expensed in the current year.

The de minimis safe harbor election lets you deduct certain assets costing $2,500 or less as expenses this year instead of being depreciated over many years.

After making the election, the expenditures may be reported as Miscellaneous expenses.

Follow these steps:

At the screen Your 2022 rental and royalties summary, select Edit to the right of the rental activity.
At the screen Here's rental property info, select Add expense or asset.
Add Improvements, furnishings and other assets and Miscellaneous expenses.

@boonas

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B

boonasAuthor

I added an asset (a refrigerator-$1320). On the screen 'Tell us more about this asset', I clicked I purchased the asset and clicked I sold the asset and entered the date of sale. On the screen 'Enter Asset Sale Information' I entered the total amount of the asset in both 'Sales Price' and 'Sales Expenses' ($1320). Is this correct? Says I have a loss but 0 allowed for depreciation. Don't I get the depreciation for the few days I owned the property in 2022? (Jan 1-5, 2022)

PatriciaV

Employee

Yes, that's correct. You cannot claim depreciation on an asset you purchased and sold in the same year. As JamesG1 said, you can instead expense these purchases. Or you can include them in your basis for the rental property sale.

Also consider that when you expense a purchase, you are writing off the full value. Depreciation spreads the cost over several years. Expensing a purchase is usually a better tax option unless you have passive losses carried over from prior years.

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