topic Sale of rental property in Investors & landlords

Sale of rental property

cdGurley — Wed, 17 Mar 2021 21:17:48 GMT

My CPA has figured the capital gains and depreciation on the sale of my rental property.

Sold for $135,000

total gain is $116,894

tax basis is $18,106

depreciation is $50,298

long term capital gain is $66,596

TurboTax is reporting $143,595 on schedule D as capital gains and I get an alert that line 22 (depreciation) can't be larger than line 21 (Tax basis plus expenses).

So what TurboTax is calculating is more that twice of what my CPA has figured.

Any help, please.

Re: Sale of rental property

ThomasM125 — Wed, 17 Mar 2021 21:42:56 GMT

You probably entered the sale in the rental section and then again in the investment sale section of TurboTax. You should just enter it in the rental section and delete the investment sale entry.

Re: Sale of rental property

cdGurley — Thu, 18 Mar 2021 14:54:26 GMT

Thanks for the quick reply. I have one more issue, I have depreciation from the original 1031 property and I don't know where to put that and TurboTax doesn't ask any question about my tax basis from the exchange.

Thanks again in advance!

Re: Sale of rental property

DaveF1006 — Thu, 18 Mar 2021 19:01:53 GMT

It depends. The basic concept of a 1031 exchange is that the basis of your Old Property rolls over to your New Property. In other words, if you sold your Old Property for $100,000, and bought your New Property for the same, your basis on the New Property would be the same. It makes sense then that your depreciation schedule would be exactly the same, which it is!

This is why Turbo Tax did not ask additional questions about your tax basis from the exchange.