@Opus 17 wrote:
You just have a slight loss on the unfavorable treatment of the hot water heater. (You probably lost about $200 by depreciating it instead of expensing it. Not the worst mistake you could have made.)
That is not a mistake at all at this point. Had the water heater been expensed, the entire amount would now be subject to recapture at ordinary income tax rates upon the sale. The treatment chosen by @michash2998 will result in less recapture if the sales price is allocated accordingly.
