topic Can depreciation recapture be offset by short term capital loss? in Get your taxes done using TurboTax

Can depreciation recapture be offset by short term capital loss?

shanaling — Wed, 29 Jan 2025 16:09:24 GMT

I got this message from TurboTax. $27,708 is depreciation recapture. $12,674 is short term capital loss from selling stocks. Does this make sense? I though depreciation recapture is ordinary income and can only be offset by short term capital loss by $3000. Please explain. Thank you.

Re: Can depreciation recapture be offset by short term capital loss?

Mike9241 — Wed, 29 Jan 2025 17:41:16 GMT

1250 gain is not ordinary income. it is part of the capital gain realized on the sale of depreciable real estate.

it in effect can be offset by short-term capital loss

example

capital gain $500 of which $100 is 1250 gain

stcl $450. net capital gain $50 but no 1250 recapture.

there is a worksheet for this in the schedule D instructions.

Re: Can depreciation recapture be offset by short term capital loss?

DianeW777 — Wed, 29 Jan 2025 17:43:38 GMT

Yes, a gain from the sale of depreciable real property, or depreciation recapture, starts on the Form 4797, then flows to the Schedule D with your other capital gains and/or losses. There they will be netted before being carried to the 1040 with your other taxable income.

This would be due to straight line depreciation that was required since 1986. 1250 Gain Information