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geckohale
New Member

Does Pub 523 Line 5b depreciation basis adjustment include depreciation prior to May 1997?

We purchased a condo unit in 1986 for use as a rental.  We converted it to our primary home in 2016 and plan to sell it later in 2018 (after we have lived in it at least 730 days). 

I have read Pub 523 extensively, but have a question on "How to Figure Your Gain or Loss Worksheet" (pg. 7), Line 5b:

Does "Any depreciation you took (or could have taken)" include ALL rental depreciation from 1986-2015 or only depreciation after May 6, 1997? 

(I understand that the depreciation recapture on Schedule D only includes depreciation after May 6, 1997)


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Accepted Solutions
Critter
Level 15

Does Pub 523 Line 5b depreciation basis adjustment include depreciation prior to May 1997?

If you have had the rental since 1986 then the entire home must have been fully depreciated by now ... review the depreciation worksheet to confirm this ... then you will enter in the total depreciation taken for the entire property + and improvements or additions. All the depreciation must be recaptured as ordinary income  then the profit in excess of the depreciation will be considered capital gain. 

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3 Replies
Critter
Level 15

Does Pub 523 Line 5b depreciation basis adjustment include depreciation prior to May 1997?

If you have had the rental since 1986 then the entire home must have been fully depreciated by now ... review the depreciation worksheet to confirm this ... then you will enter in the total depreciation taken for the entire property + and improvements or additions. All the depreciation must be recaptured as ordinary income  then the profit in excess of the depreciation will be considered capital gain. 

View solution in original post

geckohale
New Member

Does Pub 523 Line 5b depreciation basis adjustment include depreciation prior to May 1997?

Thank you. I suspected that, unfortunately.  It was fully depreciated in 2005 as it was ACRS 19-year property back then.
geckohale
New Member

Does Pub 523 Line 5b depreciation basis adjustment include depreciation prior to May 1997?

Although I am not sure about the total depreciation, as there were limits based on income & personal use back then.  None of it is in TurboTax as my husband tried another tax product one year and depreciation was NOT carried over when we went back to TurboTax, so it reflects the maximum amount without the limits. We are trying to find all the records for those 19 years to find out what depreciation we actually were allowed to take (which was not the maximum).
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