"I sold a rental property in 2021 that was converted from a main home in 2012. Until this year, I never claimed depreciation. "
Unfortunately this is a problem.
The IRS does not necessarily demand you claim depreciation yearly HOWEVER the IRS does demand you "recapture" the depreciation whether you claimed it or not.
How did you report the rental each year? What did you report as the basis for the rental on your Schedule E?
The basis would have been the Fair Market Value at the time you switched from personal to rental or what you originally paid, whichever was lower.
"Now comes depreciation. Under the Sale of Property / Depreciation, I indicated that the home was sold, gave the requested information and it calulated that I could have claimed $92,603 in prior years and $10,094 this year. I'm not being asked for a sales price here and I've read a lot of conflicting posts on that."
True, the program first needs to know what has happened with the rental up until the sale before it can compute the sale itself.
Rentals are depreciated over 27.5 years. It was a rental for almost 10 years. If the basis of the rental was 367,663 (it could have been something else since you don't say what the fair Market Value was) about 104,000 depreciation sounds right.
So the adjusted basis would be about 366,000 - 104,000 = 262,000
If you received about 358,000, that would be a recapture of about 96,000.
Once the rental is listed, you need to go to the asset list of that property to report the sale.
Go back into the rental section, and review. Click EDIT by the property, then scroll down to "Sale of Property / Depreciation"
Yes, you could have carried over the rental loss year after year and applied that loss when you sold the rental, did you do that?
This is something that would have needed to be reported each year so that the IRS can trace it.
@aamedia
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