My wife and I bought a rental property in 2004 for $350,000. For most of those years, our operating losses were limited to a statutory $25,000. We sold the property in 2019 for $378,500 and now we are allowed to claim $67,000 of prior-years losses. Great!!
Not so fast. TurboTax is telling me that I have a $151,000 gain on the sale after depreciation recapture.
I've already zero'd out all the improvements we made over the time we owned it.
Does this seem normal?
Then, I got hammered with AMT, which I believe effectively jams us into the 28% bracket.
I always thought AMT was to designed to punish those evil rich people for skating away without paying their "fair share", We're just a retired couple trying to get out of a bad investment.
We didn't expect this treatment so it appears that we underpaid by $23,000.
TurboTax says there will be a $111 penalty from Virginia. I'm sure there will be a ding from the Feds, too.
What am I doing wrong?
