I stopped renting out one of my rental homes on the last day of 2022, taking it off the market and used it for personal use for all of tax year 2023. I entered that data on my 2023 tax program and it basically deleted that property from my Schedule E. It is now 2024 and I'm going to sell the property. I still have the depreciation worksheet from 2022. It makes me nervous that the data was deleted entirely. After I sell the property I'll need to pay taxes on the capital gain. What happens to the basis? Am I supposed to subtract the depreciation I took during the previous years of reporting income as a rental property? Will the TurboTax program generate a form showing that information? Did I mess this up?
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You will need to compute the capital gain and depreciation recapture.
Depreciation recapture is reported as Ordinary Income
Profit over that is capital gain. Since it was converted to personal use, there can be no loss.
Example-
Purchased for 200,000
Depreciation taken (or could have been taken) 50,000
Sold for 300,000
Adjusted basis is 150,000
Depreciation recapture is 50,000
Capital gain is 100,000
Since this was no longer being reported as a rental activity, enter it under
Wages & Income
Business Items
Sale of Business Property START
Select "Sales of business or rental property that you haven't already reported"
Enter the "Sales of Business or Rental Property" on the following screen
(this includes depreciation)
Select the second option "Real estate that I took depreciation on"
Continue through this interview
The depreciation recapture will be reported as Ordinary Income 1040 line 8
Capital gain on 1040 line 7
You will need to compute the capital gain and depreciation recapture.
Depreciation recapture is reported as Ordinary Income
Profit over that is capital gain. Since it was converted to personal use, there can be no loss.
Example-
Purchased for 200,000
Depreciation taken (or could have been taken) 50,000
Sold for 300,000
Adjusted basis is 150,000
Depreciation recapture is 50,000
Capital gain is 100,000
Since this was no longer being reported as a rental activity, enter it under
Wages & Income
Business Items
Sale of Business Property START
Select "Sales of business or rental property that you haven't already reported"
Enter the "Sales of Business or Rental Property" on the following screen
(this includes depreciation)
Select the second option "Real estate that I took depreciation on"
Continue through this interview
The depreciation recapture will be reported as Ordinary Income 1040 line 8
Capital gain on 1040 line 7
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mwweiner
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M-M1
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DMartinWI
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Anonymous
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DC6
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