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Old 02-23-2014, 12:12 PM
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Depreciation on rental property

Hi, all.
I had a sale of rental property in 2013. In regards to this, how is the line 22
(Depreciation allowed) of form 4797 calculated? Is this simply an addition of allowable depreciation from all the previous years?
I had this property for last 6 years and for first couple of those 6 years, I did not claim depreciation on Schedule E. Does this affect what I put on line 22(4797)?

Thank you very much in advance



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Old 02-23-2014, 02:40 PM
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Quote:
Originally Posted by nbalu1974 View Post

#1;Hi, all.
I had a sale of rental property in 2013. In regards to this, how is the line 22
(Depreciation allowed) of form 4797 calculated?




#2;Is this simply an addition of allowable depreciation from all the previous years?



#3;I had this property for last 6 years and for first couple of those 6 years, I did not claim depreciation on Schedule E. Does this affect what I put on line 22(4797)?

Thank you very much in advance

#1;you need to report the whole of accumulated depre taken , thegreater of allowed oir allowable,previously on the rental home. You can find the accum depre of rental pty on your book., BS.As you can see, on the sale of the rental pty, you must recaputirer the unrecap depre as ordinary income taxed at 25% aslongas your marginal tax rate is 25% or higher. You need to report it on form 8949/Sch D of 1040 and 1040 line13 and 43.

#2;yes. You must recapture depreciation that isthegreater of allowed or allowable;so allowed depre; Depreciation that you have actually deducted on your tax return and was not disallowed by the IRS has been allowed. Depreciation that can be deducted on a tax return is allowable. The allowed or allowable rule comes into play when you can claim a deduction for depreciation on your tax return, but for some reason you elect not to do so. For example, if you had a rental property for which you reported income and deductions on Sch E, but over the years never deducted depreciation on the property .When you sell the rental property you must add back, or recapture, the depreciation that you would have been able to claim as a deduction on the building during the years that it was available for rent. This is depreciation that was allowable under the Tax Code.



#3;No as mentioned above as part of the allowable depre, it needs to be recaptured aslongas the allowable depre is greater than the allowed, actually deducted on your return.



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Old 01-09-2015, 01:10 AM
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Location: USA
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You must recapture depreciation that isthegreater of allowed or allowable;so allowed depre; Depreciation that you have actually deducted on your tax return and was not disallowed by the IRS has been allowed. Depreciation that can be deducted on a tax return is allowable



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