I bought a townhome on November 6, 2009, which I lived in until January 2022 for $140,000. I bought a new home in 2021 because I got married and kept the townhome as a rental property. I rented it from January 15, 2022 to January 15, 2023. I ended up selling the rental property on March 8, 2023 after not being able to secure a tenant. I sold the property for $355,000. I am using the 2 of 5 last years criteria, which covers me up to $250,000, and my net ended up $215,000, which would exempt me from taxes.
Because I claimed depreciation for a year and a few months, I knew I needed to recapture this on Form 4797. The amount calculated for depreciation was $3,833. I went through the Asset Entry Worksheet in Turbotax where I listed my townhome as being valued at $140,000. I am stuck on the part where it says to enter sales price and land sales price, business portion only. Since I don't have to pay taxes on the $215,000, I was guessing that amount would be $0. However, then it shows me as having a loss of $135,334 after the depreciation is taken into consideration. Am I thinking about this correctly? Am I able to write off that amount of loss or am I missing something?
