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Depreciation Recapture

Ana
Level 2

A client sold a rental property and carrying the mortgage. I know that the depreciation has to be recaptured on the year the property sold while the rest of the gain can be spread out as they get paid. The software does not seem to recapture such or I may be entering the information incorrectly. Under the disposition of the asset, I added the sale price of the property and then the amount the owner is carrying. I have researched many articles and can't find any answers. Any thoughts?

 

Ana

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IRonMaN
Level 15

Has any of your research involved straight line depreciation for real estate?

Barber! Why didn't I think of this before? Getting paid to give out bad tax advice - need I say more? I've run with scissors for years so it is a natural fit.
Ana
Level 2

Not sure that the depreciation method is relevant. I have a 110000 cost, 65K accumulated depreciation sale price of $320K carrying $300K. I should have capital gains in the amount of $65K- and taxable income for the interest received in 2020. Perhaps I am wrong, it is not every day that I see owner-financed sales. 

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IRonMaN
Level 15

But it is relevant.

Barber! Why didn't I think of this before? Getting paid to give out bad tax advice - need I say more? I've run with scissors for years so it is a natural fit.
Ana
Level 2

Thank you!!!!!!!!! I just realized that yes, we did have a straight line and your response led me to more research. Thank you for your assistance. 

IRonMaN
Level 15

 

IRonMaN_0-1617304731900.png

 

Barber! Why didn't I think of this before? Getting paid to give out bad tax advice - need I say more? I've run with scissors for years so it is a natural fit.