I purchased a rental house 20 years ago. That year I added it to TT as an asset. Since then I added about 20 assets as improvements amounting to about $30,000. Most of those assets have already been fully depreciated;
meaning their 'life' ended years ago. I thought I read if they were fully depreciated they are not recaptured at time of sale. The program says I must recapture about $100,000 depreciation which seems very high. Any suggestions please? Some more facts if relevant. TT put the sale on schedule D and called it 1250 property.
TT put the basis and depreciation on form 4797. I am adjusting the basis with $20,000 sales costs including commissions.
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Section 1250 property is depreciable real estate, which is what you have in the form of a rental house and improvements thereto.
TurboTax is likely 100% accurate in terms of the forms and the amount of depreciation recapture (unrecaptured Section 1250 gain).
There is no law, rule or regulation stating that fully depreciated property (in this context) is not subject to recapture (in fact, just the opposite is the case).
Section 1250 property is depreciable real estate, which is what you have in the form of a rental house and improvements thereto.
TurboTax is likely 100% accurate in terms of the forms and the amount of depreciation recapture (unrecaptured Section 1250 gain).
There is no law, rule or regulation stating that fully depreciated property (in this context) is not subject to recapture (in fact, just the opposite is the case).
"I thought I read if they were fully depreciated they are not recaptured at time of sale." if that were true and you held residential real estate over 28 years, it would be fully depreciated, then you would be arguing there would be no recapture on the building itself which is obviously false. the question is do those improvements still exist and if they do what their fair market value is. hiring an appraiser would be money well spent.
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