Recapturing Depreciation on In-home office

Forum|Forum|3 years ago
July 29, 2022
2 replies
23 views

This is when working as a lonely sole-proprietor can get frustrating.....

I've been trying to follow the instructions for re-capturing depreciation on an in-home office for the sale of a home, but it seems like I'm making it more complicated than it should be. Anybody have any "tried and true" system that they use?

I allocated the sales price on the depreciation schedule so that the gain is ONLY the accumulated depreciation. Then I reduced the sales price on the disposition entry form by that amount.

I also reduced the basis on the disposition entry by the basis on the 4797 (before depreciation since the depreciation is recaptured on the other form).

The recaptured depreciation is showing up on the Schedule D as long term capital gain. Isn't it supposed to be recaptured as ordinary income?

BTW: The gain is well above the taxpayers' $500,000 exclusion.

Lacerte Tax

This topic has been closed for replies.

Best answer by willatbird

Thanks for confirming. I think I have "summer brain".

sjrcpa

Level 15

It should be on Schedule D. It's unrecaptured 1250 gain and is taxed at a maximum rate of 25%.

The more I know the more I don’t know.

willatbirdAuthorAnswer

Level 5

Thanks for confirming. I think I have "summer brain".

George4Tacks

Level 15

I would input the date of sale on the depreciation input, but NOT the sales price. Input the sale of residence on Schedule D, check the box for Business use in year of sale and input the total amount of depreciation used on OIH as Depreciation allowed after May 6,,,,

Answers are easy. Questions are hard!

willatbirdAuthor

Level 5

I tried that and it didn't seem to calculate it properly. When I read the Lacerte instructions it said I needed to split it.

Sign up

Login with SSO

Let's get you signed in

Login with SSO