where should sale rental property not depreciated report on 4797?

[skyworks]

a small condo purchaseed at $23k, was a principal home for one spouse before married and moved out , they  did not live and tried to rent for the last 5 years, did not rented out.

Previoud tax return had reported all expenses with out rental income, but no depreciation taken.

Now the Condo sold for $75k, my question is where should the sales report on form 4797?

Enter the sales in a disposition screen report on page 1 of 4797?

Or enter the sales in a depreciation screen report on page 2 of 4797?

Anyone had that situatuin?

[sjrcpa]

I am skeptical that this is really a rental property. Why wasn't it rented for 5 years? What efforts were made to rent it?

If it is a rental property, you have to use the larger of allowed or allowable depreciation. In the year of sale there is a change in accounting method procedure to "catch up" on the missed depreciation. Form 3115.

[abctax55 · Accepted solution]

I agree with Susan; in what part of the country has a unit been "unable to be rented" for five full years.

An unreasonable asking price (twice the going rate for example), or denial of ALL applicants without valid cause or reason would indicate it was NOT really available for rent.

Sounds like the prior year returns may need to be amended.

[skyworks]

thanks both, I reviewed with the client , will report as 4797 sale of second home, then amend previous return.

[sjrcpa]

A second home = personal and does not get reported on 4797. It goes on Sch D/8949. Gain is taxable. Loss not allowed.