Sale of rental rental property

Forum|Forum|3 years ago
March 12, 2023
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I purchased a house in Savannah, GA 15 years ago and maintained it as a rental property the entire time.

Three years ago I refinanced it and added my daughter's name to the title (but not the loan)

I sold it last year. The costs and profits were split equally between my daughter and myself at closing.

I was told that the capital gains and depreciation recovery for the entire 15 years need to be split equally between myself and my daughter on this year's taxes. Is that correct? Will I have to make a manual entry in TurboTax somewhere to reflect this, both for the depreciation and the capital gains.?

KrisD15

Below is a link to a conversation that seems to mirror your situation.

If only you claimed the rental income and expenses, only you would claim the "Depreciation Recapture".

Capital Gains is another issue.

HOW you added her matters. Was she named as a "remainder" where she would not claim any of the gain.

If as a second owner, I think technically you would claim the capital gain based on your basis (cost) up to the point where you added your daughter, then half the capital gain attributed to the last 3 years. Your daughter would then claim the remaining gain which should reflect half the gain from the time she became part owner until you sold. In this case you would need to estimate the value of the property when you added your daughter as an owner.

One answer in the linked conversation suggest the person handling the rental claims everything.

If still unsure, consult a local real estate attorney.

Linked Conversation

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bwoodcockAuthor

Thank you for the quick reply. It is very helpful.

I handled all the rental income, claimed the expenses, etc., so it makes sense that I would take care of the depreciation recapture.

I am not sure what you mean by "named as a remainder"? I refinanced the house about 3 years and had her added to the title at that time. At closing they split the proceeds evenly between us and provided each of us with paperwork showing an even split of the costs, etc.

Thanks again!