I just sold a rental property (with mixed personal use) and need help recapturing depreciation correctly. I'm confused what allowed/allowable depreciation entails and how much I must recapture. Specifically...
1. Years where I had <100% business use and deducted less than full amount of depreciation.
2. Years where lower rental income limited the depreciation I could deduct.
3. The year I sold and did not attempt to rent.
For these 3 scenarios, I'm confused if I deducted the allowed amount or less than the allowed amount and thus which amount I must recapture.
Background info and examples...
I purchased the property as a primary residence in Dec 2016 for $150,000 and then converted to rental use in Jun 2018. Basis is $137,500 using FMV (lower than adjusted basis of original purchase). Depreciation for the first year is $2708 and $5000 every full year using MACRS 27.5 SL MM.
In 2018, I had 100% business use and deducted $2708.
In 2019, I had 64% business use (150 Fair Rental Days and 84 Personal Use Days or 150/[150+84]) so I only deducted $3200 of the full $5000 depreciation.
In 2020, I had 100% business use, however, I only had $2500 income after expenses so I only deducted $2500 of the $5000 depreciation.
In 2021, I had 100% business use and deducted $5000 of the $5000 depreciation.
In 2022, I sold in July for $200,000 and did not attempt to rent all year, so I'm not filing Schedule E and thus not deducting any depreciation for 2022.
I'm assuming the "allowed" amount of depreciation for which I must recapture is $15,908 (i.e. 2708+3200+5000+5000+0) or is it something else?
When reporting the sale, I'm using TurboTax desktop which only asks for 6 inputs: Gross proceeds from 1099-S, Date Acquired, Date Sold, Total Sales Price*, Cost of Property plus Sales Expenses*, Depreciation Taken on this property. TurboTax advises to only enter the Sales Price and Cost that relate to business use. To determine business use portion, do I just average the business use for 2018-2021 (100%,64%,100%,100%) and not factor 2016-17 or 2022? If so, this would be 91%.
Gross proceeds from 1099-S: $200,000
Date Acquired: when I converted to rental and not purchased correct?
Date Sold: Jul 1, 2022 Total Sales Price: 91% of 200,000? So $182,000
Cost of Property plus Sales Expenses: 91% of ($150,000 purchase in 2016, $5000 purchase expenses, $12000 sales expenses)? So $151,970
Depreciation Taken on this property: do I enter...
$15,908 (i.e. 2708+3200+5000+5000+0) which is what was actually taken/deducted
or something else?
