Rental Property in the previous year was sold and a mortgage taken back. On the Sch E worksheet, Box H was not checked in the year of sale, and subsequently, depreciation flowed through to Line 18 of the following year Sch E, for the sold property. There was a second Property purchased in the new year and so there are two properties listed on the Sch E. Why would depreciation come through for the sold property? Is it because the Box H - Complete Taxable Disposition was not checked in the year of sale?

If a mortgage is taken back for the sale, is depreciation given the seller when the property basis was not completely taken? Does the depreciation continue until the mortgage is satisfied and should Box H then be checked? Thnak you