Rental property depreciation recapture

[TP1956]

I used my home as a rental property for 13 months. I converted it to personal use on June 1, 2020 and then sold the house on August 21, 2020.  The amount depreciated was $8050 for 2019 and $3850 for 2020 totaling $11,900.  When I report the sale of the home, I have to lower my cost basis (purchase price) by $11,900 for the depreciation recapture.  Then there is the issue of "recapturing depreciation after May 6, 1997".  Do I have to enter the $11,900 again in this part of Turbotax?  It seems I am being recaptured twice!!

[AmeliesUncle]

You will need to check how the numbers flow on the tax return, but my first thought is that it will work out okay.

After lowing your Basis by the depreciation, let's say your gain is $50,000.  When you enter the "depreciation after 1997", you would essentially be telling the program "OF the $50,000 gain, $11,900 of that is from depreciation".  So the program would view it as $11,900 of the depreciation and $38,100 of other gain.

[ThomasM125]

No, you just enter the depreciation once, the taxable portion of your gain will be taxed as ordinary income as opposed to capital gain income to the extent of the depreciation allowable on the property.

[ColeenD3]

Since you had rental income, you will enter the sale in the rental section. Make sure you mark that you sold it. Once in the sales section, the program will handle everything.

[Carl]

DO NOT enter your lowered cost basis. Enter your "actual" cost basis. Then when asked for the depreciation amount to be recaptured, enter the $11,900 and the program will "do the math" that is necessary to lower the cost basis.

You want to do it this way, because tax on the recaptured depreciation is capped at a maximum of 25%.