Rental Property Sold - Capital Gains, Depreciation Recapture, Income, etc

[Sam123]

I am following up on a past question. I sold a rental property which I rented out initially, moved back in for around 3 years, and rented a few months before selling it. I am trying to better understand capital gains, depreciation recapture, income, etc. Here is some info I pulled from TurboTax and trying to understand my implications as:

I thought rental property capital gains are taxed as long term capital gains and not added to income on 1040 Line 8 Additional Income. What form will they show up on? I see numbers added to income in 1040 tax form- is that a result of depreciation recapture- if so, mine is only $35750 and not $53373? Looks like am not understanding something here.

• Form 4797- Sales of Business Property Part II Line 18b Redetermine Gain Loss: $58070
• Schedule 1:   Additional Income and Adjustments to Income  Part I Line 10  Additional Income - Enter here and on Form 1040, 1040-SR, or 1040-NR, line 8: $53373

• 1040 Form: **Line 8 Additional income from Schedule 1, line 10: $53373

I see numbers added on as income in 1040 tax form

Details on draft initial numbers:

Form 4797- Sales of Business Property 

• Part I Line 6 Gain: $3834
• Part I Line 7 Combine: $3834
• Part II Line 10 Date Acquire/Sold: 8/26/11 to 3/30/24
• Part II Line 10 Gross Sales Price: $62852
• Part II Line 10 Cost: $4782
• Part II Line 10 Gain: $58070
• Part II Line 17 Combine: $58070
• Part II Line 18b Redetermine Gain Loss: $58070
• Part III Line 20 Gross Sales Price: $68364
• Part III Line 21 Cost: $100280
• Part III Line 22 Depreciation: $35750
• Part III Line 23 Adjusted Basis: $64530.
• Part III Line 24 Total Gain: $3834.
• Part III Line 26a Additional Depreciation: 0
• Part III Line 26c Subtract: $3834
• Part III Line 30 Total Gain: $3834
• Part III Line 32 Form 4797, line 6: $3834

Schedule D Capital Gains and Losses:

• Part II Line 11 Gain from Form 4797, Part I: $3834
• Part II Line 15  Net long-term capital gain or (loss): (4449)
• Part III Line 21 Smaller for Form 1040, 1040-SR, or 1040-NR, line 7: ($3000) 

1040 Form:

• Line 7 Capital Gain or Loss: ($3000)
• **Line 8 Additional income from Schedule 1, line 10: $53373

** Not sure why this is additional income here as thought this would be long term capital gains.

Schedule 1:   Additional Income and Adjustments to Income

• Part I Line 4 Other gains or (losses). Attach Form 4797: $58070 
• Part I Line 5 Rental real estate Schedule E: ($6290)
• Part I Line 9 Total Other Income: $1593
• Part I Line 10  Additional Income - Enter here and on Form 1040, 1040-SR, or 1040-NR, line 8: $53373

Home status:

Rental: Aug 2011 to July 2020

Personal: Aug 2020 to July 2023

Rental: Aug 2023 to March 2024

THANK YOU!!

[M-MTax]

Understood, but you should really keep this limited to one thread:

Rental property converted to Primary and back to rental then sold

I'll page the participants in that one:

@Mike9241 @AmeliesUncle 

[Mike9241]

unfortunately we have no access to your return and thus your worksheets and entries so our ability to help is limited. This is a public forum, so personal info should not be posted 

Part III of the 4797 is the sale of the depreciable real estate The building).  Since holding period was more than 1 year it flows to Part1 which the flows to schedule D, 

we have no idea what's represented in Part II. these numbers are from your entries. We don't know what was sold or why there is no depreciation.  Cost doesn't seem right when compared to sales price. Also, why no depreciation?  this section is treated as ordinary income (schedule 1 line 4) so if you made an improper entry this could be the result 

schedule D line 15 being a loss would mean you had other long-term capital tranactions - like stocks etc. again we have no way of knowing if entries are correct. 

since we have no access to your return, review your entries. If you still can't figure it out, you may have to upgrade to Live which would allow a Turbotax pro to actually see your tax file. your other option is to seek the help of an outside tax pro