Capital loss carryover and home office depreciation recapture

jrze · ‎April 30, 2020

I am a sole prop have depreciated a home office for the past 10 years. I also have a large capital loss carryover from the sale of land. When I sell my home, will the depreciation recapture be offset by the capital loss carryover? I have found information regarding that depreciation recapture for sale of a rental property would be offset by a capital loss, but do not know if there is a difference if the depreciation was for a home office.

Hal_Al · ‎April 30, 2020

Q. When I sell my home, will the depreciation recapture be offset by the capital loss carryover?

A. Yes.

Home office Depreciation is treated the same as any other depreciation. When you enter the home sale, in TurboTax, there will only be one screen to enter depreciation. You will not be asked to identify it as home office depreciation.

DawnC · ‎April 30, 2020

Yes, because the depreciation recapture is reported as a capital gain. Recaptured depreciation is taxed at a maximum rate of 25%, instead of the top rate of 15% for long-term capital gains, plus applicable state income taxes. Report this recaptured amount on Schedule D (Capital Gains and Losses), not Form 4797 (Sale of Business Property).

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Capital loss carryover and home office depreciation recapture

Deductions & credits

Deductions & credits