I sold my rental property and turbo tax premier gave me a "we calculated you took depreciation of x) my 4592 numbers and schedule give a much less number, do I change it to the correct number claimed in pror years?o

Forum|Forum|4 years ago
April 14, 2022
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Carl11_2

Employee

I'm sure you mean 4562, not 4592.

Keep in mind that you are recapturing all depreciation taken on all rental assets that you sold. Not just the depreciation on the property itself. So you have to consider total depreciation on all assets.

Typically, if you're reporting the sale in the SCH E section of the program then all this depreciation recapture is done in the background, and there's no need for the program to "question you" about it.

Also, to get the total amount of depreciation, on the 2021 form 4562 you have to add together the amounts in the prior year's depr column and the current year depr column. That's on the one titled "Depreciation & Amortization Report". You may also have depreciation on the "Alternative Minimum Tax Depreciation Report" form that might get figured in, if in any one or more years AMT depreciation was necessary.

Finally, if you are reporting the sale in the "Sale of Business Property" section, that's usually because the FMV of the rental property was less than the original purchase price on the date placed in service. In that case, depreciation is figured on FMV at time placed if service is that is the lower amount. But your gain is figured on the original cost basis, thus requiring it to be reported in Sale of Business Property. So the "assumption" of recaptured depreciation would therefore be to high, and you would need to correct it to the actual depreciation taken.

melmjdAuthor

thank you

yes i did look at the form that said depreciation and amortization to get the total figure. My total was about 100K less than what turbo tax calculated and I wanted to make sure I was putting in the correct number even though TT worked in the background. It made a BIG difference I what I actually owed if I used my old tax return reports versus what TT ran in the background. I want to make sure I am putting in the correct numbers in the right places.

Also, I put 32K into the house before I sold it. I just allocate that expesnse between the precentage on land and asset or just on assett. It was cabinets, new flooring, paint, etc. Is that right?

Carl11_2

Employee

i did look at the form that said depreciation and amortization to get the total figure. My total was about 100K less than what turbo tax calculated and I wanted to make sure I was putting in the correct number even though TT worked in the background.

So you'll use the depreciation that was actually taken.

Also, I put 32K into the house before I sold it. I just allocate that expesnse between the precentage on land and asset or just on assett. It was cabinets, new flooring, paint, etc. Is that right?

Assuming this was done after the last renter vacated and before the sale, enter the total costs of all of that as a single asset classified as residential rental real estate. The "Cost of Land" box will have a zero or noting it it, since all of your property improvements apply to the structure, and not to the land. You can do this, because it's not depreciated anyway. Just give it an in service date of the closing date of the sale and a business use percentage of .1 or .01%. If any depreciation is figured, it will be so minimal that it just won't matter really.