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?
Solved! Go to Solution.
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%.
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?