Where do I add depreciation recapture after selling a rental investment property?
Hello, I have sold a residential rental property that I have depreciated in past years. How do I addmdepreciation recapture to my 2024 tax return? Thanks.
Answers
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Hi gray22,
Thanks for your question and joining our Community.
Depreciation recapture is calculated on Form 4797 based on your entries of the rental property and it's historical rental time period in Schedule E. When you enter the property in the Depreciable Assets section of Rental Income, you will enter all the information about the sales of the property and the depreciation recapture will be done for you. Our software will automatically calculate it for you. There's nothing for you to add.
If however you are referring to total prior year depreciation already claimed to add that up, if you didn't use FreeTaxUSA software last year, you can look at your depreciation worksheets at the end of your 2023 tax return to find both the prior year depreciation (years 2022 and earlier) and current year depreciation (year 2023). Adding those two figures together gives you your 'total prior year depreciation' to claim on your 2024 Schedule E for the rental property.
If you rented anytime in 2024, you'll have both current year depreciation, as well as depreciation recapture calculated for you automatically by our software program.
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Kristine, thank you. Is the captial gains calculated in that same section? Or do I need to enter it seperately as a 1099 s?
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Hi again gray22,
If you have Form 1099-S for the sale of the rental property, enter your rental property information in the Rental Income (Schedule E) section. Then answer Yes to the question on the Rental Income Information screen that asks if you disposed of your entire interest in the property.
Capital gains or losses are calculated, and the program reports them on Schedule D.
