I'm using Turbotax premier and sold my primary residence last year (which was previously used as a rental). In one screen, it asks for the depreciation previously taken on a home to calculate the adjusted cost basis. In another screen, it asks for depreciation taken after 5/6/1997 for purposes of calculating taxable ordinary income and recapturing the depreciation. In my instance, the post-5/6/1997 amount is significantly less than the total amount that was taken. I'm being told by a tax expert that depreciation taken regardless of the year is taxable and must be recaptured when a home is sold. Is that correct? If so, why does TurboTax ask for it to be separated out?
the 5/6/1997 depreciation is AMT depreciation (alternative minimum tax). at one point the depreciable life for real property had one life for amt purposes and a shorter life for regular tax purposes. all the depreciation you took on the rental property for regular tax purposes will be recaptured as section 1250 income. the AMT amount will not affect your taxes unless the AMT tax (form 6251) is higher than your regular tax.