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How do I figure out how much depreciation to recapture?

I had a rental property from 2013 that I sold in March of 2015. Each year I had a carryover loss. Now I have to recapture depreciation. Since I had carryover, doesn't that mean I didn't receive the full tax credit for the depreciation each of those years? How do I calculate the depreciation to recapture?

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Level 5

How do I figure out how much depreciation to recapture?

You need to recapture the amount "allowed or allowable" even if you didn't benefit from it for a particular year.  In the year of the sale, you can still apply your carryover loss even though you sold the property so you don't lose out on missed deductions for depreciation.

Residential Rental Property is depreciated over 27.5 years using Straight Line Deprecation.  This means the same amount each full calendar year is allowed.  If you don't have the previous tax returns to look at the Schedule E for the depreciation amount, you can take the depreciable basis of the property and and divide that by 27.5 to get the annual amount.  Then for the year of purchase/sale, you will prorate the amount based on the number of days available (or used) as a rental.  (annual depreciation / 365 X number of days available as rental).

Add all of the full year amounts to the partial year figures and that will give you your depreciation recapture amount. 

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