topic rental property sale and depreciation in Investors & landlords

rental property sale and depreciation

billdayreef — Wed, 10 Dec 2025 00:21:53 GMT

I am using TurboTax premium desktop 2024 version. I am entering the sale of rental property and dealing with the depreciation section. When I get to the asset entry worksheet line 10 it wants me to enter prior depreciation.
I have read in the help section that the IRS assumes that I have taken advantage of all the depreciation that I am
entitled to. In this case I have owned the property greater than 27.5 years so IRS would assume that the property
is fully depreciated. If that is the case then whatever prior depreciation I took would be irrelevant, correct? Furthermore that depreciation will be recaptured. The problem is that if I enter a value for prior depreciation TT takes that amount and uses it as recapture it increases my overall taxes. So my question is which depreciation is it? The full amount that the IRS says or the amount I put into that line 10. or is TT adding both ammounts together?

I am using 2024 turbotax with an assumption of sale of the property to make sure I understand how TT handles this.

Re: rental property sale and depreciation

M-MTax — Wed, 10 Dec 2025 15:29:11 GMT

@billdayreef wrote:
.........whatever prior depreciation I took would be irrelevant, correct?

Well, it's the cumulative amount of depreciation allowed or allowable.

As a result, if you took more than what was allowable by the Code and Regs, you would report that amount.

Re: rental property sale and depreciation

billdayreef — Wed, 10 Dec 2025 18:35:04 GMT

if I reduce previous depr to 0 TT does not apply the IRS rule which is to apply the maximum allowable which is 100% whether its taken or not,

that 100% rule is important because it means that the IRS will recapture that ammount. but I don't see that.

so does that mean that TT is making an error?

Re: rental property sale and depreciation

M-MTax — Wed, 10 Dec 2025 18:38:19 GMT

@billdayreef wrote:
so does that mean that TT is making an error?

Yeah. I don't believe TurboTax is so hot with depreciation adjustments; you have to be cautious.

You should be able to determine the total accumulated depreciation deductions you could have taken and you should also know the total deductions you did take. Use the higher figure.

Re: rental property sale and depreciation

billdayreef — Wed, 10 Dec 2025 23:59:43 GMT

TT started out as little more than a spread sheet where the end user just inputted the values. Over time they

evolved to the "interview method" and then did all the calculations for you. In this case they just have not

developed an interview method for it.

I wonder how the online version handles it? I may find out, I just got an email saying "no more desktop" version.

Re: rental property sale and depreciation

M-MTax — Thu, 11 Dec 2025 00:13:22 GMT

@billdayreef wrote:
I wonder how the online version handles it?

The online version isn't going to handle it any differently than the desktop versions; they should be exactly the same.

The other thing is if you enter the placed in service date, the program should figure out almost exactly what the accumulated depreciation deductions should have been over the applicable recovery period.

Re: rental property sale and depreciation

M-MTax — Thu, 11 Dec 2025 00:11:20 GMT

@billdayreef wrote:
I may find out, I just got an email saying "no more desktop" version.

I doubt it actually said that and that alone. The desktop versions should be around at least for another couple of years or so.

Re: rental property sale and depreciation

AmeliesUncle — Fri, 12 Dec 2025 01:53:35 GMT

@billdayreef wrote:
In this case I have owned the property greater than 27.5 years so IRS would assume that the property
is fully depreciated.

Was it always used 100% for rental? If so, yes. Your "prior depreciation" would be the same amount as the Basis of the building.

Yes, depreciation lowers your Basis, so entering the Prior Depreciation will increase your taxable gain.