Here is the deal. Using Deluxe.
I'm trying to enter the sale of a rental property. Nothing unusual, basic condo I held for 10 years and sold at a gain. Straight line depreciation.
From what I read this should be a 1231 property. But Turbo Tax has it listed as a 1250 property in form 4797.
I can't figure out how to fix this. It gives me no control over the form, and I can't even delete the section and start over.
This program really has issues.
A rental property is 1250. Section 1250 generally applies to real property (such as commercial buildings and rental houses) and real property structural components (such as roofs and flooring) that are depreciated over longer periods of time than section 1245 property. Section 1250 outlines specific taxation rules for property that has been depreciated using an accelerated depreciation method. When section 1250 property is sold at a gain, the difference between the straight-line depreciation and the accelerated method claimed is taxed as ordinary income, while the rest of the gain is taxed at capital gains rates.
MaryK4: Thanks for the answer. Just to clarify: What you are saying is that if there is no accelerated depreciation (like the person who was asking you the question indicated that he used a straight line - 27.5 year depreciation method), then there is no ordinary income to be taxed. His gain from selling his rental property is then a Section 1250 property, form 4797 reportable, and Schedule D calculated event - gain will be taxed at capital gain rate. However, the recapture of the depreciation will be taxed at 25%. Am I understanding what you said correctly? Thanks.