Section 179 & Rental Homes

[majdpe]

In December I sold my rental home and took advantage of the military extension clause allowing me to use the "any two years within the past five" (we've only rented since moving away from the house).  Turbotax keeps listing the sale of the house as a Section 179 recapture even though I used the MACRS deduction while I had the house rented.  Is the Section 179 and the MACRS deduction the same thing for the purpose of selling the house? 

I didn't think you could use Section 179 for rental property. I've searched my previous tax returns and do not see anything referring to Section 179, just the MACRs deduction.  Thanks for the assist.  - David 

[ColeenD3]

It is not a section 179 recapture but a Section 1250 recapture. You must recapture the depreciation you took while it was a rental. The exclusion does not exclude this portion of the gain.

[majdpe]

Thanks. I understand the recapture part.  I'm just confused about the "Section 179" part.  Turbotax keeps labeling the sell of the home as Section 179 and nothing I seem to do changes that.  I can't find anything on my previous tax returns that would cause Turbotax to consider the recapture as Section 179.    Not sure if it makes a difference or not.  I just don't want to overpay (or underpay) if it does matter.  Thanks for the quick reply. 

[ThomasM125]

I'm not sure why you are seeing a reference to section 179, as that would be applicable if you took that depreciation election in a year when you rented the property. However, you can look on form 4797 Sale of Business Property, in Part III, line 22 to verify that the correct amount of depreciation was claimed on the property. In that section you will see the sales price, cost and depreciation used to calculate your taxable gain or loss on the sale of the property.

If you are using TurboTax online, you will only be able to see the form after you have paid for the program.

[majdpe]

Thanks!  I'll check it out.