topic Can you not take depreciation the year you sell a rental house? in Get your taxes done using TurboTax

Can you not take depreciation the year you sell a rental house?

jamesrath1970 — Sun, 02 Feb 2020 14:12:37 GMT

We sold our rental house in 2019. We rented the house for 6 months and sold it 3 1/2 months later. Can we not take depreciation in 2019? Otherwise, I assume we would pay taxes on the depreciation next year.

Re: Can you not take depreciation the year you sell a rental house?

Anonymous_ — Sun, 02 Feb 2020 19:18:37 GMT

You can take a depreciation deduction for the year of the sale, but you cannot take a depreciation deduction for property that you purchase and dispose of in the same tax year.

Re: Can you not take depreciation the year you sell a rental house?

jamesrath1970 — Sun, 02 Feb 2020 18:41:54 GMT

We purchased the house nearly 7 years ago. When you say one "can" take depreciation, is depreciation an option in that case? Or is it required? Secondly, if we take depreciation this year, then I assume next year we would pay taxes on it, correct?

Re: Can you not take depreciation the year you sell a rental house?

DeanM15 — Sun, 02 Feb 2020 19:01:19 GMT

You should take the depreciation on the rental house for as long as it was a business venture.

The IRS will ding you for the depreciation recapture, whether you take the depreciation or not. Depreciation recapture is for depreciation "allowed or allowable", so you should take the benefit of the depreciation.

When you enter the sale of the house in TurboTax it will take you through the process. Answer the questions carefully.

You can find out more information about entering the sales data here. You can find out more about depreciation on a rental property here.

Re: Can you not take depreciation the year you sell a rental house?

Anonymous_ — Sun, 02 Feb 2020 19:24:40 GMT

@jamesrath1970 wrote:

We purchased the house nearly 7 years ago.

Was the house a rental during that seven-year period?

Did you convert it to a rental from personal use at some point?

If the house was used exclusively for rental use when you purchased it seven years ago then, as @DeanM15 stated, the IRS will whack you regardless of whether or not you actually took deductions for depreciation on an annual basis. If you have not been taking deductions for depreciation on this rental for an extended period, you should consult a tax professional.

Re: Can you not take depreciation the year you sell a rental house?

jamesrath1970 — Sun, 02 Feb 2020 22:14:27 GMT

No, I have been taking the depreciation since we purchased the house. It just doesn't make sense to take depreciation the year you sell it. But it sounds like that is how the rules are set up. Thanks.