Sale of Home (Primary and Rental)

[Mandhi]

My client sold their rental home on 8/3/20. However, they DID meet the tests to qualify for the Primary Home exclusion.

I thought that they would only have to recapture the depreciation previously taken/allowed since converted to rental, on 10/1/17. And my understanding is that the deprec recapture is as ORDINARY INCOME. But the program is showing a capital gain.

I think there may be some box somewhere that I didn't check correctly.

[Mandhi]

FURTHER: It is also showing a huge amount ($76,228) of Allowable Depr on the 4797, when the actual prior depr is $11,713. Cannot for the life of me figure out where the $76K is coming from.

[PatCatIntuit]

Mandhi,

Thank you for your question.

That is correct, the depreciation while the home was a business would be what is recaptured.  And that would be captured as ordinary gain.   

Typically any gain after that could be excluded with the section 121 exclusion from sale of home.   Be sure that the inputs for the sale of home are entered on the asset input screen.   The article below provides more detailed instructions.   

https://proconnect.intuit.com/community/form-8949/help/reporting-a-sale-of-home-on-an-individual-ret...

If the depreciation looks too large, you may have a bulk sale.  The combination of all the assets depreciation would show on the 4797.

If you're still having problems, please contact our support so they can see the actual return and amounts you are seeing.

You can choose Live Chat from the left hand navigation  pane in the PTO program.   Or call at 1-800-200-7599.

Regards,

Patrick Carroll

[BobKamman]

What tax rate is it applying to the recaptured depreciation?  No more than 25%?

What purchase date did you enter?  Maybe back around 2000, when they bought the house?  Try entering the date it was converted to rental.  

[Mandhi]

Thank you, Bob! That's a good idea, on the purchase date. But all I can see is where I put the Date Placed in Service when I created the Depr Asset - and that reads 10/1/17.

Is there another place I may have put in a "purchase date"? (Sorry, first year with this program)

Thank you!