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Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 13343
Experience:  15years with H & R Block. Divisional leader, Instructor
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I sold a rental unit in 2015. I purchased it in 2007 for

Customer Question

I sold a rental unit in 2015. I purchased it in 2007 for $217,500 and sold it in 2015 for $194,000. My net proceeds are $183,302. Previous tax years (on Schedule E line 18 under expenses--Depreciation expense or depletion) show an amount of $4842. What is my capital loss? Do I need to deduct this amount (for each year 2007-2015) from the cost basis? Thanks.
Submitted: 10 months ago.
Category: Tax
Expert:  Robin D. replied 10 months ago.

Hello

In the sell of rental your cost is the purchase price plus improvements less depreciation.

Your basis would be $217,500 -$4842 (this needs to be the depreciation in every year that you claimed) = 212658

Your difference in that and the sale price is the loss or gain

212,658 - 194,000 = 18658 loss

All the depreciation claimed is added back for calculating the basis to start.

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Customer: replied 10 months ago.
You sent me to a page to pay (which I already did before you started this chat)--please let me know what's going on...
Expert:  Robin D. replied 10 months ago.

I did not send you a page to pay. I have only sent you an answer and added the request to rate positively (Smiley Faces or Stars).

Customer: replied 10 months ago.
You DID send me a page to pay. Then I got a message saying I had already paid. I still haven't gotten the full answer I am seeking. Please reply.
Expert:  Robin D. replied 10 months ago.

All you have to do is tell me what else you need to know. I am happy to continue.

The full depreciation (all form every year has to be subtracted form the purchase price. So let's continue from there.

Expert:  Robin D. replied 10 months ago.

All you have to do is tell me what else you need to know. I am happy to continue.

The full depreciation (all from every year has to be subtracted form the purchase price. So let's continue from there.

Expert:  Robin D. replied 10 months ago.

I do not know anything about an additional message from the site. I can only see this thread here.

Customer: replied 10 months ago.
I don't fully understand your answer. Do I deduct the depreciation ($4842) for every year and subtract that from the selling price? If so this would wipe out any capital loss. Is this correct?
Expert:  Robin D. replied 10 months ago.

If each year you took $4842 for depreciation then the total amount is subtracted from your purchase price.

If you started the rental in 2007 and you were able to claim $4842 in 2007 and then the same amount each year while it was rental (8 years of depreciation only because I know that first year you were not allowed the full amount) then you had $38736 used in those years as depreciation.

You have to subtract that from the purchase price.

217,500-38736 = $180764 as your BASIS

You sold for 194,000 so you had a gain. 194000 - 180764 = 13236

Expert:  Robin D. replied 10 months ago.

You have to subtract the true amount of depreciation you claimed on that house. I have just used these numbers as an example.

Expert:  Robin D. replied 10 months ago.

Checking back to see if you were finally able to calculate your true basis for the rental.

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