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April 14, 2022
Question

Do I have to claim depreciation on a rental of past years I used the standard deduction and Schedule E was zero?

  • April 14, 2022
  • 1 reply
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Do I have to use past depreciation on a rental property sale if Schedule E showed zero?

1 reply

April 14, 2022

if you don't, then what happens when you sell is that you must report as income any depreciation you would have been allowed on the property. 

 

 

example

cost                                                                                   $50

depreciation that would have been allowed           $20

net basis                                                                          $30

sell for                                                                              $65

taxable gain                                                                    $35

portion treated as section 1259 gain                         $20                         

capital gain portion                                                         $15

 

even if you never claim the $20 n depreciation, your gain is still $35 with the components as above

 

you just can not take the depreciation in the year of sale.  you've been using an improper accounting method that requires filing form 3115. this should be done by a pro and the sooner the better