This is one of the most helpful post I was able to find. I too owned a rental property (duplex), lived in one unit and rented out the other since purchasing the property in Jan, 2005. Then in 2012, the owner occupied unit was also converted to rental and both units remained as rental since then. In March, 2022 I sold the duplex. Based on you post, I want to confirm I should do the following for 2022 tax return in order to properly claim capital gain and asset depreciation recapturing tax. Pardon me for the long message, the instruction on this was not intuitive and I think this post will help others as well.
- Under Wages & Income => Rental Properties and Royalties (Sch E) => click on edit next to the property name then the next page shows the rental property info like the rental income, expenses which I already entered. I should then click on "Add expense or asset" => select "Sold rental property" under Asset then follow the prompt to finish adding "Sold rental property" as an asset. Adding "Sold rental property" asset will pull all the previous assets I had been depreciating into this "Sold rental property" asset. I have a list of 12 assets (which are actually just 6 assets, split into upper and lower unit of the duplex reflecting the different dates I started depreciating for each unit based on the dates each unit is used as rental). In the asset list, two halves of the refinance cost, roof replacements, etc as well the building (minus the land) were all depreciated.
- in your reply you said each asset needs to be properly disposed of. For the refinance cost which I categorized as a nontangible asset, whatever left over that's not depreciated got transferred to the expense field. Does this seem right?
- For roof replacement, new garage, other non-building assets, could I just enter $0 as sales price for each half of the assets since the building asset includes the sale prices already? that's where it confused me.
- How do I deal with two halves of the building (no land) assets? For the sales price, the Turbotax described it as cash received, the calculation would be price sold minus mortage balance paid off? To get the sale price for the building portion, I just used the ratio of the building depreciated vs the original purchase price and multiply the (price sold - mortage balance). Then for the sale price for the land portion, I just subtract the sales building price of the earlier calculation from the sales price (price sold - mortage balance). Do these calculations seem right? Do I just split the sales prices at 50/50 and enter into each half of the building asset?
- How do I add other improvements I didn’t previously depreciate as assets? I think these were deducted as expenses in the earlier days when I didn’t know what I was doing, like repour the concrete steps ~4000 in front of the duplex, replace the wood deck ~4000. Also we remodeled the kitchen and bathroom ourselves total of ~$3000 material while we lived in the upper unit and the expenses where not deducted at the time work was done because it was owner occupied and after we moved out not deprecated as assets.
Thank you!
