How do I report recaptured depreciation on a property sold at a loss?

[bogwhan]

I’m trying to complete a tax return that has a property sale. The property was a rental property for a number of years. In later years it has simply sat because they couldn’t find tenants that could afford or that they were happy with. They basically took the condo off the market and it sat while they tried to sell it. During those years it was not further depreciated. Now the property has sold. It has sold at a loss so I have depreciation to recapture. I understand the recapture is at 25% and that I can add my recapture back to basis but I’m having trouble figuring out how to add the 25% recapture. I have read everything available as to ProSeries and I still can’t get the process to work properly. How do I report the additional tax? My depreciation recapture is approximately $25K. At 25% that would create an additional tax of $8500. I can't get the program to calculate/show this tax. What am I doing wrong?

[sjrcpa · Accepted solution]

Depreciation recapture is the part of the gain attributable to depreciation. When sold at a loss there is no recapture.

[Accountant-Man]

Although sjrcpa is correct, IF THERE WAS A GAIN, and some was recapture, the recapture would be taxed AT THE MAXIMUM of 25%, not necessarily at 25%.

[rookie]

I have a question on this too. I have a client that sold a property and I know based on tax rules that he must pay 25% recapture on his $6,000 of accumulated depreciation on a rental property. He has a capital loss carryforward that is wiping out the entire capital gain portion, but shouldn't he still owe recapture of roughly $1500? ProSeries simply isn't calculating recapture, only capital gain. I does however reduce the cost basis by the depreciation, but that only effectively charges the depreciation as a long term capital gain. Am I missing a setting or something to trigger the recapture tax as ordinary income?

[sjrcpa]

Unrecaptured 1250 gain is not ordinary income. It is capital gain taxed at a maximum rate of 25%.

1245 gain is ordinary income.

[bfdorsey1]

how do you report recaptured or/sale of rental property in ProConnect?

[mcateryan]

@bfdorsey1 Did you ever receive an answer to your recapture question on where to enter recaptured depreciation after the sale of a property in ProConnect?

[bfdorsey1]

very disappointing. 

i was repeatedly told,

"Unrecaptured 1250 gain is not ordinary income. It is capital gain taxed at a maximum rate of 25%.

1245 gain is ordinary income."  Which i knew and was the reason i was asking the question, "where to enter recaptured depreciation after the sale of a property in ProConnect?"

"Did you ever receive an answer to your recapture question on where to enter recaptured depreciation after the sale of a property in ProConnect?"

So, the answer to your question is NO. The response I received was absolutely worthless.

[mcateryan]

I am replying to your message because I have a similar ProConnect issue as well.

I do not know where in ProConnect to enter 2020's depreciation figure (derived from the home office use). The home was sold in 2021.

I, too, need to recapture this prior year's depreciation figure in Proconnect.

What screen or form would I enter it on? Or, what override feature would I use?

Thank you!

[bfdorsey1]

I have come to one conclusion, Proconnet's Help, searching help (due to its poor search engine) is basically worthless.  I eventually google my question and try to figure it out from there. It is very disappointment. 

[bfdorsey1]

the question was where do i enter this in proconnect.  your ans is, forgive me, worthless.  Appreciate the try. 

[mcateryan]

I did Google the question, but the majority of answers on the Google Search come up with Intuit Accountants (ProConnect) answers that do not apply.

Do you know where to enter recaptured depreciation (from home office use) after a home sells?

Thank you!

[bfdorsey1]

let me be clear, i am not an accountant, nor am i an expert in proconnect.  however, at your own risk, i entered it Sch K, Disposition (D,4797, etc.).  I have no further help.

[qbteachmt]

I google:

Proconnect sale of home

And get this Help article:

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

[bfdorsey1]

thank you very much.  First time i was able to get help on proconnect.  Again, thank you.

[Camp1040]

@bfdorsey1 Maybe you are a rude blowhard and all the really really smart people on this forum did not drop everything they were doing to help you.

[Camp1040]

@IRonMaN  I didn't realize I was responding to a 3 year old post!!

LOL as the youngsters say.

[IRonMaN]

Looks like you are in a feisty mood today😉

Crazy things happen when we go back to 2019 ---------- without the help of the DeLorean.

[Camp1040]

Why would you say that Huh?

Actually I'm in a festive mood, I'm not Irish but my middle name is Patrick, gives me enough cause to celebrate and eat corned beef and cabbage and a Reuben sandwich for dessert.

I also enjoy the pickled Herring on New Years Eve to celebrate the Swedish side of my wife's family.   Enough celebrating....back to work.