Sold Rental property - How to handle remaining depreciation on Roof

[keaang]

Hi

I'm using Turbotax Business.  My LLC sold a rental property at a profit, but not sure how to handle the remaining depreciation on the roof which is a separate asset in Turbotax from the main property since I replaced the roof a few years back.

Do I select "sold" or "disposed of by some other means?  If I should select "sold", how do I put a value of what it was sold at from the overall selling price of the house and what do I do with the depreciation that was taken already and what about the remaining depreciation?  If I should select "disposed of by some other means, and no value is tied to it, what should I do about the depreciation that was already taken and the remaining depreciation that's left?  

Thanks

[DavidD66]

The way I suggest you handle this is to allocate the sales price amongst all the assets related to the house.  For example, Lets say the sales proceeds were $206,000, the cost basis of the house was $100,000 and the cost basis of the land was $50,000, you would allocate the proceeds as follows:

Roof & Skylight - $5,075

Land - $50,000

Building - $150,925

This will result in no gain on the disposition of the Roof or the land, and all the gain would be on the building.  You could also allocate the proceeds on a pro-rata basis, but the total gain will be the same.  

[Mike9241]

"You could also allocate the proceeds on a pro-rata basis, but the total gain will be the same." True but there would be section 1250 depreciation recapture on both the roof and building. this would result in $1638 more 1250 gain and that much less in capital gain. depending on their tax situation they could pay more in taxes.