Tax Year Prior to 2020: Depreciation

[johnnyt1355]

I sold a rental property 6/25/2019 and Turbotax is asking for a depreciation number. I have always used turbotax. Where do I find the depreciation numbers from my old returns to put in and how far back do I need to go?

[LeonardS]

Your 2018 tax return will have a TurboTax worksheet called "Form 4562 Depreciation and Amortization Report" that is included with your tax return.  This report includes all prior and current depreciation taken for the property since you placed it into service.

You do not have to back past your 2018 tax return for any additional depreciation information it is all in your 2018 "Form 4562 Depreciation and Amortization Report"

[johnnyt1355]

The form 4562 has multipile Total colums. It has Cost net of land, Land, Section 179 Depreciable Basis, Prior depreciation, current depreciation and Adjustment preferences. Which one do I use or do I add them up.

[GiseleD]

Here are the instructions for Form 4562. Reporting the sale of a rental property can be tricky, and you will use more than one of those columns. You may want to follow the guided interview questions in TurboTax to properly report this. Here's how:

1) Search sale of rental property in TurboTax.

2) Click the Jump to link, and follow the guided interview.

@johnnyt1355

[Carl]

If the last occupant to move out of the property prior to the sale, then it's still classified as rental property. If you report the sale in the rental section of the program, it will take care of all this stuff *for* *you*. It's simple really, just not intuitive. Here's the guidance.

Reporting the Sale of Rental Property

If you qualify for the "lived in 2 of last 5 years" capital gains exclusion, then when prompted you WILL indicate that this sale DOES INCLUDE the sale of your main home. For AD MIL personnel who don't qualify because of PCS orders, select this option anyway, because you "MIGHT" qualify for at last a partial exclusion.

Start working through Rental & Royalty Income (SCH E) "AS IF" you did not sell the property. One of the screens near the start will ahve a selection on it for "I sold or otherwise disposed of this property in  2018". Select it. After you select the "I sold or otherwise disposed of this property in 2018" you continue working it through "as if" you still own it. When you come to the summary screen you will enter all of your rental income and expenses, even it it's zero. Then you MUST work through the "Sale of Assets/Depreciation" section. You must work through each individual asset one at a time to report its disposition (in your case, all your rental assets were sold).

Understand that if more than the property itself is listed in your assets list, then you need to allocate your sales price across all of your assets.  You will only allocate the structure sales price; you will NOT allocate the land sales price, since the land is not a depreciable asset.  Then if you sold this rental at a gain, you must show a gain on all assets, even if that gain is $1. Likewise, if you sold at a loss then you must show a loss on all assets, even if that loss is $1

Basically, when working through an asset you select the option for "I stopped using this asset in 2017" and go from there. Note that you MUST do this for EACH AND EVERY asset listed.

When you finish working through everything listed in the assets section, if you ever at any time you owned this rental you claimed vehicle expenses, then you must also work through the vehicle section and show the disposition of the vehicle. Most likely, your vehicle disposition will be "removed for personal use", as I seriously doubt you sold your vehicle as a part of this rental sale.

[mustangboss]

Here is my similar problem.

I sold my property in 2019, a property that I had a home office in, as well as rented out a bedroom .  This activity was in 2016-2018 for the most part.

The TurboTax question I am stumped on is - " Since you used your home for business purposes or rented it out, you must reduce the home's cost basis by  the total of any depreciation deductions that you took over the years.

Depreciation Taken on this home ______

Depreciation Taken for AMT ________

[RobertG]

The two numbers will probably be the same, unless you were in a Alternative Minimum Tax situation in prior years. 

If you were you would have filed Form 6251. This is fairly unusual.

You find the amount of prior year depreciation from the "Form 4562 Depreciation and Amortization Report" that is included with your prior year tax return.  This report includes all prior and current depreciation taken for the property since you placed it into service.

If you were in an Alternative Minimum Tax situation in prior years there would be an Alternative Minimum Tax Depreciation and Amortization Report included with your prior year tax return. 

[mustangboss]

I cannot find that form in the past 2 years within TurboTax.   

If I cannot find, what next?

[mustangboss]

I located it.   The answer is $3,697 for current Depreciation.  I found this in TurboTax 2016.  I then take it by how many years it was used for business, I am going with 4, but need help finding or determining business use percentage.

Thanks in advance.

[VictorW9]

The square footage of the portion used for rental is the ideal way to get business usage. The other method by using rental days that may fluctuate from year to year may not give an accurate estimate. That choice should have been at the beginning to arrive at the depreciation of the rental portion of the property.