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February 26, 2025
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Sold Rental Property in 2024 and Depreciation not being carried over.

  • February 26, 2025
  • 1 reply
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I sold a rental property in 2024 and checked the box in Turbo Tax that the property was sold.  Turbo Tax never asked me anythung else, I had to go to the Business section and enter the sale.  However, I wpould assume TurboTax would bring over the prior depreciation.  Nothing is in that box.

 

Any ideas on how to correct this to have Turbo Tax calculate it correctly?

    Best answer by KrisD15

    Was the building (and land) entered as a rental asset? 

    Yes, if you used TurboTax year after year, the depreciation would carry over. 

    Entering the "put into service" date and purchased price would also indicate the proper depreciation. (you need to have given a value to the land, which is not depreciated and then also to the building. Sales proceeds are then divided between the assets) 

     

    You do not report the sale of the rental under 

    Business

    Less Common Business Situations

     

    HERE IS HOW TO REPORT THE SALE OF A RENTAL

    Enter all the 2024 income and expenses for that rental first


    Go to the "Property Profile" section, and select "I sold this rental in 2024" on the "Do Any Of These Situations Apply To This Property?" screen.
    Continue through that interview but do not leave the Rental Section
    Scroll down to Sale of Property/ Depreciation
    (if you don't see Sale of Property/ Depreciation you didn't select "I sold this rental in 2024")


    Yes, I want to go to my asset summary 
    Select EDIT for the property
    Continue through this interview and be sure to select on the "Tell Us More About This Rental Asset" screen ALL- 


    • I purchased this asset (if appropriate)
      The item was sold
      Yes or No to 100% use


    Continue through the interview and report the sale
    Allocate the sale proceeds to the property and the land, as well as any additional assets listed for that rental


    Sale proceeds over cost will be capital gain (capital gain tax rate)
    DEPRECIATION RECAPTURE will be Ordinary Income (your tax rate)
     

     

     

    1 reply

    KrisD15
    KrisD15Answer
    February 26, 2025

    Was the building (and land) entered as a rental asset? 

    Yes, if you used TurboTax year after year, the depreciation would carry over. 

    Entering the "put into service" date and purchased price would also indicate the proper depreciation. (you need to have given a value to the land, which is not depreciated and then also to the building. Sales proceeds are then divided between the assets) 

     

    You do not report the sale of the rental under 

    Business

    Less Common Business Situations

     

    HERE IS HOW TO REPORT THE SALE OF A RENTAL

    Enter all the 2024 income and expenses for that rental first


    Go to the "Property Profile" section, and select "I sold this rental in 2024" on the "Do Any Of These Situations Apply To This Property?" screen.
    Continue through that interview but do not leave the Rental Section
    Scroll down to Sale of Property/ Depreciation
    (if you don't see Sale of Property/ Depreciation you didn't select "I sold this rental in 2024")


    Yes, I want to go to my asset summary 
    Select EDIT for the property
    Continue through this interview and be sure to select on the "Tell Us More About This Rental Asset" screen ALL- 


    • I purchased this asset (if appropriate)
      The item was sold
      Yes or No to 100% use


    Continue through the interview and report the sale
    Allocate the sale proceeds to the property and the land, as well as any additional assets listed for that rental


    Sale proceeds over cost will be capital gain (capital gain tax rate)
    DEPRECIATION RECAPTURE will be Ordinary Income (your tax rate)
     

     

     

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    samwilliAuthor
    February 27, 2025

    Thank you, that worked just as you described.   I still show a value under Sale of Business property and I did go in and delete the info I entered.  is that normal now that I corrected the sale or do I need to clean that up?

     

    Again, Thank Youy - it was easy to follow your direction

    KrisD15
    February 27, 2025

    Yes, the profit from the rental sale will also be listed on Schedule D and Form 4797 as "Sales of Business Property".

    You can look at Schedule D and verify that the first entry you made was deleted and not on your return. 

     

    (the profit will also be included on your 1040 line 7)

     

    Desktop, switch to forms using the FORMS/STEP-BY-STEP option on the top right. 

    Online users use the steps in this link. 

     

    Thank you for using TurboTax.

     

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