MarilynG1
Expert Alumni

Investors & landlords

If you didn't calculate depreciation on your Rental Property for the first year, when you set up your Rental in TurboTax, the correct depreciation was calculated for you based on the 'Date First Started Using for Business.'

 

Depreciation Recapture refers to when you sell your rental property.  All the depreciation taken over the years is subtracted from your original purchase price (plus improvements) to determine the Cost Basis for reporting the sale.

 

TurboTax calculates your Cost Basis (and Gain/Loss) figuring depreciation was claimed for all years as a rental (per IRS regulations).

 

Since you only missed claiming depreciation for one year, you probably don't want to file Form 3115 with your 2021 tax return.  It would have to be mailed and you would probably get an IRS letter, since you violated regulations by not claiming it in the first place. 

 

My advice would be just to report the sale in 2021 with the depreciation that TurboTax calculates for you. 

 

Click this link for more info on Form 3115. 

 

 

 

 

 

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