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Updated almost 9 years ago, 02/04/2016

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11
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0
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Jason Heath
  • Santa Cruz, CA
0
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11
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Depreciation Recapture for rental property

Jason Heath
  • Santa Cruz, CA
Posted

I sold a rental property.  Half-way through owning it, I realized that I had failed to begin depreciating it when I bought it, and I started depreciating it.  Had I depreciated it from the beginning, I would have accounted for $20,000 of depreciation.  In reality, I only accounted for $8,830 of depreciation.

I am using Turbo Tax.  Regardless of whether I input $20,000 or $8,830 as prior depreciation, my Federal tax return does not change.  However, my state tax return does - inputting $8,830 rather than $20,000 results in a larger State refund ($1,039).  I am thinking this is because the feds are going to take depreciation recapture on what I should have taken ($20,000) rather than what I did take ($8,830).  However, does California not follow those same rules, and does it only take depreciation recapture on what I actually claim I accounted for in depreciation ($8,830)?

Help!  And Thanks!

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