I sold a rental unit in 2023,
I allocated the sales price to all the assets
there is the building plus 2 separate renovations, some Railings, new A/C
All assets were coded as asset type I - Residential real estate
When I allocate the sales price, the two Renovations are showing up on page 1 of 4797
Not on Page 2 which will handle recapture.
Both renovations were Purchased in 2018 and 2019, All the other asset are before 2018
I dont understand why these 2 renovation values are on Part 1 while the other 5 assets associated with the
sale are on 4797 page 2 .
What would be my data entry mistake?
You'll need to sign in or create an account to connect with an expert.
Are the two items listed in Part I or Part II on page one of IRS form 4797 Sales of Business Property? See here.
Is there an allocation for land in Part I of IRS form 4797 Sales of Business Property?
Sorry for the delay.
The property has 8 assets on depreciation schedule.
First - The building and land are part of one asset with allocations for building & land. The land sale
portion is showing up correctly in Part 1. The building sales is showing up correctly in Part 2
This asset was typed an i-residential rental real estate and purchased in 2005.
Subsequently , I had purchased Roof, railings, A/C, Appliances, Hot water heater . These assets are are correctly showing up in part 2 4797 . They were all purchased before 2017.
The problem I mentioned above lies with the renovations purchased in 2018 and 2019.
Summarized as 2 assets (one per year) both have same asset type I-residential rental real estate
there is no land associated with it, but it has been depreciated 27.5 years SL /MM
But they are showing up on Part 1 of the 4797 along with the land. I dont believe this is correct. and I cant figure out why .
I think I figured it out. The property I sold was a lousy investment and the allocable portion of the sale to the improvements actually generated a loss, therefore there would not be recapture depreciation.
You are correct, you don't have depreciation recapture if you sell at a loss. Depreciation recapture is governed by sections 1245 and 1250, according to the Internal Revenue Code (IRC). Your loss is governed by IRC Section 1231.
See this TurboTax tips article for more information on selling at a loss.
Still have questions?
Make a postAsk questions and learn more about your taxes and finances.
cinmay1120
Level 2
1tttennjack
Returning Member
FromHItoDrhm
New Member
spitfire
Level 1
janovak1024
Level 1
Did the information on this page answer your question?
You have clicked a link to a site outside of the TurboTax Community. By clicking "Continue", you will leave the Community and be taken to that site instead.