Welcome back! Ask questions, get answers, and join our large community of tax professionals.
cancel
Showing results for 
Search instead for 
Did you mean: 

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

Highlighted
Level 1

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?


Labels (1)
0 Cheers
1 Solution

Accepted Solutions
Highlighted
Level 15

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


ex-AllStar

View solution in original post

4 Replies 4
Highlighted
Level 15

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


ex-AllStar

View solution in original post

Highlighted
Level 11

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'm still a champion... of the world! Even without The Lounge.
0 Cheers
Highlighted
Level 1

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?

0 Cheers
Highlighted
Level 15

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

1245 gain is ordinary income.


ex-AllStar