Depreciation info when selling rental

Forum|Forum|3 years ago
February 7, 2023
1 reply
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So I sold a rental last year for a gain

*for each asset, both special allowance at 100% and normal depreciation items other than the property itself what sold I put for sale price? They were sold with the house such as an appliance and most were fully depreciated….

*turbo tax brings the property depreciation to get recaptured but none of the special allowance stuff

DavidD66

To keep things simple, when allocating the sales proceeds to your assets, assign the current carrying value to each asset except for the house and the land (and any other significant item such as an improvement to the property). For assets such as fully depreciated appliances, apply a sales price of $0.00. This will result in no gain or loss on all assets other than the house and land. All of the depreciation recapture will be applied to the house/structure, and any improvements.

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jonpagelAuthor

Employee

Ok thanks…so are items that are fully deprecated such as appliances or special allowance items not subject to recapture? Since if I put zero as a sales prices it doesn’t include that amount….thanks

DianeW777

They are subject to recapture if there is any gain. Recapture is necessary if there is a gain on the asset that has been sold. When assets such as appliances are older than their original recovery period (5 years), then it's likely the fair market value (FMV) is very low or zero. You have included the full sales price and applied it to the assets that have value.

In your case if the assets have a zero selling price for the reason stated, there is nothing to recapture on those specific assets. All of the gain is being factored into the sale.

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