1031 exchange...depreciation...grantor letter & more

Forum|Forum|3 years ago
March 30, 2023
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We completed a 1031 exchange in late November 2021. We sold a fully depreciated duplex townhouse (one side rented from 1979; the other from 1984). The new properties are a very small portion of 1)luxury apartment complex in Illinois and 2)family apartment complex in Virginia. I pretty much ignored the tax docs we received from them for the five weeks we owned them in 2021 so I am considering amending the 2021 returns. I did put the properties in with the cash value we had put in each so Turbo Tax generated depreciation which I don't think is correct now. 1)For Property 1 we received a Grantor Letter which includes an allocation of operations showing rental revenues and expenses (which includes Depreciation for Land Improvements and Depreciation for Building). 2)For Property 2 we received tax docs of a 1099-MISC and a 1098 Mortgage Interest Statement plus a copy of the overall balance sheet. I realize now that I also need to file an Illinois return for Property 1 and a Virginia return for Property 2.

My question is will I have a depreciation I calculate from any remaining from the exchanged property in addition to what the Grantor Letter mentions in their expenses? Property 2 tax forms doesn't mention depreciation so again is this depreciation that I calculate to be included?

Thanks for any clarification.

MAK70

Yes, you will have to amend your 2021 tax return so that you have the correct depreciation basis to use in 2022. To clarify, did you enter the Like-Kind Exchange on your 2021 tax return?

AnitaMargaritaAuthor

Yes, I did enter the like kind exchange on our 2021 return.

Another problem I will have amending the 2021 return is that I changed to a new computer. While I have my CD to reload Turbo Tax, I don’t have the 2nd state to download and Turbo Tax gives me an error when I try to open the 2021 to start an amended return. Any ideas on this, too?