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I sold my rental property for a $2k loss, but the way the questions are asked don't help. When I input the totals it says that I OWE money in the amount $15K!
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June 3, 2019
11:38 AM
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June 03, 2019
11:38 AM
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I sold my rental property for a $2k loss, but the way the questions are asked don't help. When I input the totals it says that I OWE money in the amount $15K!
You have to pay tax on “depreciation recapture”.
It may best be explained by example” you bought the property for $100K and sold it for $98K, an apparent $2000 capital loss. But during the time you owned it, you claimed (or should have claimed) $20K in depreciation expense deduction on Schedule E.
Instead of a $2K loss, you will show an $18K gain on your tax return (100K -98K + 20K = 18K). Depreciation recapture is taxed at ordinary income rates, not long term capital gains rates, but at not more than 25%.
It may best be explained by example” you bought the property for $100K and sold it for $98K, an apparent $2000 capital loss. But during the time you owned it, you claimed (or should have claimed) $20K in depreciation expense deduction on Schedule E.
Instead of a $2K loss, you will show an $18K gain on your tax return (100K -98K + 20K = 18K). Depreciation recapture is taxed at ordinary income rates, not long term capital gains rates, but at not more than 25%.
June 3, 2019
11:38 AM
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I sold my rental property for a $2k loss, but the way the questions are asked don't help. When I input the totals it says that I OWE money in the amount $15K!
Whether you have a gain or loss when you sell your rental property is determined by the Original Cost, minus the amount of Depreciation you have taken on the property (Cost Basis) and the Sales Price.
Don't forget to include any Sales Expenses you paid, and add any Capital Improvements you made to the Cost Basis of the property
Here's how to enter the Sale of Rental Property:
https://ttlc.intuit.com/replies/6686119
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June 3, 2019
11:38 AM
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