I used it for personal then back to rental
So that means you "should" have 3 properties entered on your 2019 tax return, "unless" you converted it to personal use on the 2018 tax return. Hopefully, you adjusted the cost basis properly when you converted it back to a rental. If you did not, then since you sold it in 2020 it's a fair bet the IRS will catch it 24-36 months after you report the sale on the 2020 tax return.
- The problem I face is that there is no 4562 in my 2019 return.
A major thing to check on the 2019 tax return then.
Line 18 of the 2019 Schedule E, does it show a positive amount for all rentals? If it does, then there's no need to amend. So long as depreciation was taken on the rentals in 2019, amending just because you're missing the depreciation history is like....... dumb. It's like when a bank teller cashes a check that you forgot to sign, and then signing the cancelled check after the fact. Why bother? It's already been cashed, right?
Then you'll need those same 4562's from the 2018 return, as well as the 8582 if it's present.
Wouldn't it be better if I just go ahead and cancel the depreciation from last year
Only if you want to be hanging out a sign that reads "HEY! IRS! AUDIT ME NOW HURRY! QUICK! FAST! I WANT TO PAY LOTS OF FINES, PENALTIES AND BACK TAXES!" Generally, on the tax return where you report the sale, if the depreciation recapture is not right, the IRS *will* catch it during their "slow time of year" reviews of processed returns. That's when you get the "audit my mail" nasty gram from the IRS pointing out your mistake, along with a bill for the back taxes, interest, and possibly fines too.
So get the form 4562's from the 2018 tax return, and we can work with those just fine, assuming the 2019 tax return has positive numbers on line 18 of the SCH E, it'll actually be a piece of cake.
