Sale of Rental Property

[Fa18magwai]

I sold a rental property in 2021.   I paid $330K in 2003, started renting in 2007, and sold for $461K in 2021, and had $79K in depreciation and about $26K in expenses for the sale.   When I enter the fields in turbotax, it says I have a gain of $361K which seems abnormally high.   Am I doing something wrong?   Thank you.  

[pk]

@Fa18magwai , if I assume your figures are correct , especially the accumulated depreciation then

1. your basis in the property for gain computation would be  330,000  LESS  accumulated depreciation of  79,000  = $251, 000

2. your sales proceeds  is  sales price LESS  Sales expenses ( transfer tax, title insurance / search , commission , sales prep etc. etc. ) and  would be  $461,000  less  26,000   = $435,000

  Thus your gain in the transaction should be  $435,000 less $251,000 =  $184, 000.   Of this  gain  the first  $79,000 is treated as ordinary gain ( recapture ) and the rest i.e. $105,000 is treated as  longterm capital gain.

Are you sure of the  accumulated depreciation  ( as  computed per  IRS regs. )?  Were there any suspended losses  to account for ?

Does this make sense ?  Is there more I can do for you ?

pk

[DavidD66]

It sounds like what you're entering into TurboTax does not match with how the rental property was initially set up.  That initial set up is what determines the annual depreciation.  Did you allocate a portion of the purchase price to land (not depreciated).  If you depreciated the property over 15 years and had total accumulated depreciation of $79,000, that would imply a cost basis of around $146,000.  It's impossible to diagnose something like this without being able to see the depreciation reports.  If you have depreciation report that shows the date placed in service, cost, and accumulated depreciation you should be able to enter the cost and date placed in service and get the same accumulated depreciation.  Something is not adding up. 

[Fa18magwai]

Thank you for the responses.   Your gain calculations make sense, so I'll go back in and see what I can find.   Thank you again!