Last year I sold a rental property. I am having a hard time figuring out how to write off my capital improvements (i.e., new roof). I did not depreciate anything, so can't I write it off now? As it stands, I owe A LOT and hope I can legitimately reduce what I have to pay. I would really appreciate any advice before I break down and pay someone to do my taxes.Thanks, Jennifer
JenniferLast year I sold a rental property. I am having a hard time figuring out how to write off my capital improvements (i.e., new roof). I did not depreciate anything...If you had asked, before you started renting out the property, "Should I take advantage of the ability to 'claim' depreciation?", you might have received an answer similar to the following excerpt from a recent post in a Usenet newsgroup, misc.taxes.moderated:When you sell the property you'll have to consider depreciationallowed OR ALLOWABLE. Your gain on sale will assume you took thedepreciation, so you might as well take it. Phil MartiTopeka, KSIn other words, it may appropriate to prepare some 1040X's for the past few years and save yourself some money...Phooley
When you sell the property you'll have to consider depreciationallowed OR ALLOWABLE. Your gain on sale will assume you took thedepreciation, so you might as well take it. Phil MartiTopeka, KS
When you sell you file a form called 4797. On that form you enter the original cost, the cost of improvements (and maybe some other stuff). You also enter the depreciation "allowed or allowable" and selling expenses. From which a gain or loss is determined. If you failed to take depreciation you were entitled to take, you can take it now in one (or both) of two ways. for the 3 prior years (before 2000) you can file amended returns and take the depreciation that way (and get a refund on those prior year returns). If you failed to take depreciation more than 3 years ago, you can file form 3115 and take ALL the depreciation on the current year return.But, alas, I am ahead of myself. You asked for advice.The advice here is, of course, free, and sometimes is worth all of that. This advice is priceless. Go hire some help. There is clearly a lot that you do not know about "schedule E". And what you don't know has already cost you a bunch (much of which you may still be able to recover). Don't let your ego put you in the poor house.
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