Carl
Level 15

Investors & landlords

You don't change the prior depreciation figures what-so-ever. When reporting the sale, you recapture all depreciation taken. Period. You also claim the passive activity loss carryovers which are on the form 8582. It all works out in the wash.

It's also perfectly possible that you may not have any carry overs. With the tax law changes of 2018, if you were "actively involved" in the rental activity then once your deductible rental expenses get your taxable rental income to zero, you can deduct up to $25K of the excess losses from other ordinary income. Provided of course, you have that other ordinary income to deduct it from. Being able to do that for 2018, 2019 and 2020 it's perfectly possible you have no carry over losses now. So don't be surprised in there's no 8582 in your 2019 or 2020 tax return.