Sale of rental property questions

[pcmaloney]

How do I calculate total depreciation after selling a townhouse that was used as a rental since 1999?   I know I have to pay tax on the total depreciation taken over the life of owning the townhouse. Is there a way to find the total already?  Did TT keep track of this and put the total amount of depreciation taken since 1999 in the box labeled “Prior deprec.”? Or do I have to add all individual amounts from each previous tax return to the amount shown on this year’s return? 

There are several assets at the rental that have also been depreciated over the years, such as new kitchen cabinets, windows, etc.  Do I owe tax on the recaptured depreciation for those assets as well and, if so, does TT take that into account?

[AmyC · Accepted solution]

Yes, Turbo Tax kept track for you. You can use the prior depreciation total and add this year,  if you have any current depreciation.

Each additional asset will need to be marked as sold, at a price of zero since you did not sell the items separately from the house. Those items can then be finished off as sold with the program making the corrections for you.

[pcmaloney]

Since we sold the townhouse and put the profit in the bank, we’ll owe capital gains tax.  Therefore should we plan on itemizing deductions?  And, if so, where do we enter all our costs of selling the property?

[RobertB4444 · Accepted solution]

When you enter the sale of the property you will enter in how much you received as well as any expenses you had for the sale.  TurboTax will walk you through every step.

[pcmaloney]

When selling our rental property, I understand that original mortgage loan fees, points and closing costs are deductible as expenses, but does that apply to just the original loan back in 1991, to the several refi loans over the years or to all the above?

[AmyC · Accepted solution]

Depending on the year of the refinance, you may have written off the points from the prior loan and possibly written off the points on the new loan or amortized them. The rules varied so much over the years. You need to know what you have already written off. But yes, if you have anything not written off, you can claim it now, provided you meet the current points rules. See Publication 527 (2020), Residential Rental Property - IRS for full details.

[pcmaloney]

One last question (so far!)...

How and where does TT calculate Capital Gains tax on sale of rental property?

[AmyC · Accepted solution]

See About Publication 544, Sales and Other Dispositions of Assets, page 34 is a good starting place.