Recapture of Section 1250 straight line depreciation on sale of building

[harveyburger]

I have tried for several days for help with Lacerte that the 2024 Individual Tax Program is recapturing the straight line depreciation on the sale of a rental building at a gain.  None of the agents have been able to assist me.

It is my understanding that there should be no recapture on S.L. depreciation on Section 1250 property. If so, how can I correct this.

Thanks

Harvey

[TaxGuyBill]

Can you clarify where exactly you are seeing it being "recaptured"?

The depreciation still lowers the Basis, which increases the gain.  But as you said, that gain is not called "recapture", but it is "Unrecaptured Section 1250 Gain".

[George4Tacks]

How are you entering the sale of this rental building? Through Depreciation or directly into the Dispositions screen? 

I think your question really has to do with the word "recapture". Think of it as depreciation is a loan. When you sell you have to repay it. Recapture is regarding "extra" depreciation beyond straight line. It will not show up on Schedule D, page 2, line 19 because that is where you put UNrecaptured depreciation. Look at 4797, page 2, line 26 - "If straight line depreciation was used, enter -0-" (which just shows as a blank, in Lacerte).

[TaxGuyBill]

For others reading this post, see followup post here:

https://accountants.intuit.com/community/lacerte-tax-discussions/discussion/recapture-of-section-125...