Sold rental property on real estate contract

[marcos9]

sold property on real estate contract. There was no down payment. How do I calculate the depreciation.

[MarilynG · Accepted solution]

When you enter the Sale of Rental Property (reported in Property Profile and Sale of Property/Depreciation), TurboTax will calculate the depreciation for you, based on your original Cost and Date Started Using for Business.

The same amount is used for AMT Depreciaton.

TurboTax will ask if you want to report the sale using the Installment Method in this section. 

Click the link for more info on how to report Sale of Rental Property.

This link is a detailed article on Installment Sales.

[Edited 3/12/2020 | 7:55 PM]

[tj-21]

Why do you say to use the same amount for the AMT depreciation? With rental real estate property isn't there usually different amounts? My particular situation is with a commercial non-residential property. Please provide with a link so I can read about it.

Thank you

[MarilynG1]

If you are subject to AMT Tax, TurboTax would have filled in the AMT Depreciation amount for you.

If it is blank, you can either leave it blank or enter the regular depreciation amount shown. 

For AMT purposes, you generally must depreciate business assets over a longer period of time than you can for regular tax purposes. This creates a difference between regular tax depreciation and AMT depreciation. 

Click this link for more info on AMT.

For more details, click this link for IRS Form 6251.

[tj-21]

Marilyn

This is an installment sale from several years ago, this is the first time doing the installment sale and using Turbo Tax. It sounds like there should be a difference, but you say you can enter the regular depreciation amount. I would think this could make a difference on the 2nd page of form 6251 (AMT), possibly?? It also seems like it is needed on form 6252 the worksheet showing the Un-recaptured 1250 tax table/smart worksheet.

If I use the regular depreciation, will IRS have a problem with that??

I appreciate your feedback.

Thanks

[MarilynG1]

If you didn't report the Installment Sale in the year you sold the property, you should Amend your return for that year to report it (and years following) to report the income each year.

If you are impacted by AMT, TurboTax will calculate the AMT Depreciation for you each year and report it on Form 4562.

Since we can't see your return in this forum, you may need to contact TurboTax Live to get specific help with your return.