Entering depreciatin for sale of rental property assets

Forum|Forum|3 years ago
March 20, 2023
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Been using TT for many years; currently use home and business. In 2002, sold a rental property that consists of 4 separate assets (the original building/land plus 3 improvements). The original asset and the first improvement date to 1984/1985 and are fully depreciated. When I enter the sale of asset data, TT populates the depreciation amount as the current depreciation (which is 0 for the older assets, not the accumulated. Shouldn't the accumulated depreciation automatically be populated? Can this be fixed? (Note: On my forms, the Depreciation and Amortization Report is blank for Prior Depreciation of the older assests. Does this mean that the depreciation has not been carried over from year to year or version to version in TT? Do I need to manually override the depreciation on the sale of assets section?

DianeW777

Yes. If you see that the prior accumulated depreciation is not correct then you must enter the correct figure for the assets that are fully depreciated. Since the depreciation worksheet doesn't have the information for the older assets, it would seem they are not listed as assets in your return. However, based on your comments it seems they are listed in your return. Make sure all of the original dates placed in service are correct. Check the Form 4797 to see if all prior depreciation is recaptured on the sale before making any changes or overrides.

Side note for assets fully depreciated: It's possible the depreciation worksheet has the detail removed since they were sold and they are no longer part of your return after the sale and going forward.

To review your prior year deprecation in TurboTax Home & Business use the following steps:

Search (upper right) > Type rentals > Click the Jump to ... link
Edit beside your rental > Select Update beside Assets/Depreciation > Click 'Yes, I want to go to my asset summary' > Continue
Edit beside your assets in question > Continue to 'Tell us more about this asset' > Select the checkbox beside the following
1. I purchase this asset
2. The item was sold, retired, etc...
3. Enter the date of sale
4. Check the date you began using the asset
Continue > Check or enter your depreciation for prior years (See the image below)

Once completed you should be ready to complete your return. Other information is shown below for your convenience.

To figure out the selling price for each asset:

Take the current basis of each asset against the total combined basis of all of your assets to figure out the sales price for each one; OR
Determine a fair market value for each asset against the total value of all assets to figure out the sale price for each one OR
Use the original cost of each asset listed on depreciation, add those together then divide each one by the combined total to find the percentage of the cost for each asset.

Use that percentage times the sales price and sales expenses to find the selling price/sales expenses for each asset. (Choices would also be fair market value on the date of the sale or adjusted basis on the date of the sale, which is cost less depreciation.)

Example: Original Cost (of each asset on your depreciation schedule)

$10,000 Land = 13.33%

$50,000 House = 66.67%

$15,000 Improvements = 20%

$75,000 Total = 100%

Multiply each percentage times the sales price/sales expenses to arrive at each individual sales price/sales expense.