Thanks for the response. Its really helpful!
I have some further questions prefaced with ">>>"
Adding asset for improvement
-Add Asset -> Rental Real Estate Property -> Appliances, carpet, furniture -> Appliance Replacement, 45000, date purchsed in 2022 -> Checked I purchased this asset, checked "The Item was sold...", YES 100% of time for business. -> take full deduction this year.
No, you don't take full deductions for rental assets, it isn't allowed and it wouldn't do you any good regardless since Rentals are passive and you would not be allowed the deduction. Perhaps this is the "Missing 45,000" that is inflating your capital gain.
>>> Sorry I thought I checked "Item was sold". With that I dont even get the option to take full deduction. It now ask for Sales Price and Sales Expense. Lets assume the sales price is near 45k. TWhat would I put down for the expenses? Do I calculate what % 45000 is from the 450k (building) + 101k(land) + 45k(appliances), then I use that % to calculate the allocation from the closing cost?
Since you sold for as much or more than what you purchased the property for, all depreciation needs to be recaptured, (whether you took the depreciation of not)
You say there was 19,000, so you would have 19,000 Depreciation Recapture which is Ordinary Income. (as well as any depreciation on the appliances, which should be minimal.)
>>> I actually didnt claim any depreciation for the past two years. The expenses and property tax interest deductions were making me break almost even. From what I read, I still need to repay the recapture. If I didnt claim any depreciation, would it be alright to say 0?
