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Updated almost 9 years ago, 02/04/2016
Depreciation Recapture for rental property
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!