where should sale rental property not depreciated report on 4797?

Forum|Forum|4 years ago
September 29, 2021
1 reply
17 views

a small condo purchaseed at $23k, was a principal home for one spouse before married and moved out , they did not live and tried to rent for the last 5 years, did not rented out.

Previoud tax return had reported all expenses with out rental income, but no depreciation taken.

Now the Condo sold for $75k, my question is where should the sales report on form 4797?

Enter the sales in a disposition screen report on page 1 of 4797?

Or enter the sales in a depreciation screen report on page 2 of 4797?

Anyone had that situatuin?

ProConnect Tax

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Best answer by abctax55

I agree with Susan; in what part of the country has a unit been "unable to be rented" for five full years.

An unreasonable asking price (twice the going rate for example), or denial of ALL applicants without valid cause or reason would indicate it was NOT really available for rent.

Sounds like the prior year returns may need to be amended.

sjrcpa

Level 15

I am skeptical that this is really a rental property. Why wasn't it rented for 5 years? What efforts were made to rent it?

If it is a rental property, you have to use the larger of allowed or allowable depreciation. In the year of sale there is a change in accounting method procedure to "catch up" on the missed depreciation. Form 3115.

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

abctax55Answer

Level 15

I agree with Susan; in what part of the country has a unit been "unable to be rented" for five full years.

An unreasonable asking price (twice the going rate for example), or denial of ALL applicants without valid cause or reason would indicate it was NOT really available for rent.

Sounds like the prior year returns may need to be amended.

HumanKind... Be Both

S

skyworksAuthor

Level 5

thanks both, I reviewed with the client , will report as 4797 sale of second home, then amend previous return.

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