@decogeek wrote:
1. The first question is am I right that I don't have to recapture the "home" portion of the depreciation?
2. The second question is... Do I recapture the gain on appliance depreciation?
3. How do I account for depreciated appliances that are gone, versus depreciated appliances that were sold with the house in the home or second floor apartment? (Let's say they had a value of $900 for the second floor and they were 100% depreciated. The basement fridge and washer / dryer were all but $150 depreciated and were worth $850 all together. Some appliances were listed as 179 depreciation back in 1996-1999.)
My first husband died in Sept. 2009, So I stepped up the value of his half of the property and am still depreciating his half of the house. I am not planning to recapture his half of the depreciation from 1990 to Sept. 2009. (I am not in a community property state.)
4. Am I right that I just ignore his portion of the depreciation taken up to Sept. 2009?
1) You will still pay tax on the depreciation that was taken on your 'home'. The gain from that rental room is is covered by your $250,000 exclusion, but that exclusion will not get rid of the depreciation. The full rental apartment can not be covered by the $250,000 exclusion.
2) Sort of, yes. You should enter the sale price as the Fair Market Value of the appliances. If that Fair Market Value (selling price) is higher than the Basis, that 'gain' is recaptured depreciation. If the FMV/selling price is less than the Basis, you get to claim a loss. The program should do that automatically.
3a) The old appliances that you no longer have can be deleted.
3b) Unless your sales agreement sets out a price for "personal property", you should adjust the sales price of the house. For example, let's say you sold everything for $200,000, and let's say you had decided to enter the FMV/selling price of all of the appliances for $1500. You would allocate the $1500 among the appliances, and enter the house selling price of $198,500.
4) Yes. Any of 'his' depreciation prior to his death disappeared the day he died (that is part of the step-up in Basis). You only need to account for ALL of 'your' depreciation and only 'his' depreciation after his death.
