Sale of rental property/Schedule E/Depreciation.

[dasherson]

I sold my rental apartment on March 1, 2019. 

For the past 20 years I have been allowed depreciation of $3,672 each year. Do I enter 20 (years) x $3672 for the depreciation figure when reporting the sale of the apartment?

Do I enter a depreciation figure for 2019 on Schedule E even though the apartment was sold on March 1st? Can I pro rate depreciation? Schedule E is showing depreciation for 2019 as $3,672 as it does each year.

I had no rental income in January and February 2019. Can I  submit a Schedule E? I paid management fees and other taxes in January and February, and so had a loss.

[Anonymous_ · Accepted solution]

You can file a Schedule E despite having no rental income and only expenses, but the depreciation section of the program is still incomplete (which is causing issues for your sale).

Eventually, in the Property Profile section, you will indicate that you sold the property by placing a checkmark in the box to the left of I sold or disposed of this property in 2019 (see first screenshot below).

In the Sale of Property/Depreciation section, you will also indicate that you sold the property by placing a checkmark in the appropriate box and entering the date of the sale (see second screenshot below). However, the program will have to be updated prior to your doing so.

[dasherson]

Thank you for your reply. 

I sold my rental apartment on March 1, 2019. For the past 20 years I have been allowed depreciation of $3,672 each year.  Do I enter 20 (years) x $3672 = $73,440 for the total depreciation figure when reporting the sale of the apartment, plus any depreciation which may show up on my Schedule E when I complete it?

[Anonymous_]

The program should calculate the depreciation for you in the Schedule E module, but you may have to adjust the accumulated depreciation based upon the figure that you actually deducted (i.e., $73,440).

[dasherson]

Thank you.

[Bakanpo]

I have a similar question to this - I only had the rental property in 2019, and I happened to sell it as well. I have never taken depreciation, but I will this year since first time filing as a rental.

When going through the "Sales of Business or Rental Property" screen, there is a box that asks "Depreciation Taken on This Property". Do I include the amount I am going to take on depreciation with this tax filing, or would it be 0 since I never have?

[Anonymous_]

You cannot depreciate property placed in service and disposed of in the same year.

See https://www.irs.gov/publications/p946#en_US_2018_publink1000107320

[Bakanpo]

Thank you! That makes sense.

In other scenario - let's say I have a rental since 2010 and have depreciated all years, including the plan to do so in 2019. The property was also sold in 2019. Would the 2019 depreciation be included in the "Depreciation Taken on This Property" box?

[Anonymous_]

---

@Bakanpo wrote:

In other scenario - let's say I have a rental since 2010 and have depreciated all years, including the plan to do so in 2019. The property was also sold in 2019. Would the 2019 depreciation be included in the "Depreciation Taken on This Property" box?

---

Yes, in the scenario set forth above, you would take a depreciation deduction for the period of time in 2019 that the property was available for rental use.

[MayaR0731]

Follow up question - 

I have owned a rental property since 2011 and sold it in 2019. I have the depreciation numbers from prior year's taxes. Turbo Tax seems to be asking about assets including major improvements related to these assets, but those numbers were captured over the years as depreciation / losses. What exactly is Turbo Tax asking me to include here? It seems like double dipping. Thank you!

[JamesG1]

Sale of a rental property is subject to recapture of ‘depreciation allowed or allowable’.  Please see IRS form 4797, page two, Part III, line 22.

I believe the questions that you are asking about refers to this recapture.

[sralph]

I sold my rental property after 5 years,  having used  Turbo Tax to file my taxes each year. I am now having problems in knowing how to report the sale of that property. Is the program still pending an update for the necessary calculations?

[KarenM90]

It appears that the forms to record the sale of your rental property are available in TurboTax and the software has an in-depth interview section regarding this type of transaction, here are the summary steps to enter your rental property sale:

1. With your return open in TurboTax, search for rentals and then select the Jump to link in the search result.
2. Answer Yes to the question Did you have any rental or royalty income and expenses in 2019 for property you own?
3. When you get to Is This a Rental Property or Royalty? select Rental property and fill out the description, address, and owner.
4. When you hit Do Any of These Situations Apply to This Property? check the Sold box along with any other boxes that may apply.
5. Continue following the onscreen prompts to enter info about your rental property. Eventually you'll get to the Review Your [Property] Rental Summary screen. You can report the sale in the Sale of Property/Depreciation section, along with any other pertinent info (like income and expenses)

Here is the TurboTax Help Article related to the sale of a Rental:  Sale of Rental Property

This particular section of TurboTax is rather detailed, so be careful to read all the questions completely.  If you have any problems, I would strongly recommend that if you don't have the Live Product, upgrade and have our support staff login and walk you through the steps to properly report the sale.  You can contact Live Help directly through TurboTax or here is a link to the customer service contact information:  TurboTax Customer Service

I am attaching the Forms Availability for your information:  TurboTax Forms Availability

[MT61]

I have a similar question. I have a rental property since 2004 and I sold it 2019. I have never calimed any depreciation. Can I put 0 on the (Depreciation Taken on This Property)

[Anonymous_ · Accepted solution]

@MT61 You need professional guidance and income tax preparation.

By not claiming a depreciation deduction initially, you adopted an impermissible method of accounting. As a result, you can file a Form 3115 and make a Section 481(a) adjustment to claim the depreciation that was foregone and accumulated over the years.

See https://www.irs.gov/instructions/i3115#idm140516453720416

This form, however, and scenario should be dealt with by a tax professional.