Dumb question but I just want to make sure. Sale of home with home office. Say home is sold at a loss around $20,000 but claimed derpreciation for home office of $10,000. That $10,000 is still section 1250 gain correct?
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No. If there is no capital gain, then none of it will be taxed as Section 1250 gain (which is just a type of capital gain)."You said it, they'll never know the difference. Come on, we'll paint our way out!" - Moe Howard -
Thanks. I have to look into why the software is calculating the gain no matter what.Comment
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The software is picking up the depreciaton as a gain on business portion and a loss on personal portion. I don't understand why it is doing this. So if depreciation is $5000 it is showing that as a gain on business portion not matter how much the overall loss is.
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Is the Home Office actually IN the home, or is it a separate structure?
Although most items you need to 'split' the asset between business and personal use when entering the sale, the Publications say that an Office in the Home does NOT affect the calculations, which indicates you do NOT 'split' it. So it should all be treated as ONE sale, not as a business sale plus a personal sale.Comment
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yes it is in the home. Should all be one sale. I entered the depreciation allowed or allowable but the software is splitting.it. That is the problem.Comment
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What software are you using?
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It sounds like you are triggering a Form 4797. In my software, sale of personal residence is not tied to any of the assets in the Schedule C (including OIH building and land). I have to enter the adjusted basis manually, and then I also have to enter depreciation claimed since May 6, 1997 (Sec 1250 gain) if any manually, which goes to the Schedule D Sec 1250 worksheet. So if you are using "sale of an asset" from your Schedule C to report this, maybe you are at the wrong input screen."You said it, they'll never know the difference. Come on, we'll paint our way out!" - Moe HowardComment
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I am using Drake. It has a HOME screen which is for Sale of Residence only and you put all of the data in there. Cost of home, improvements, Closing Costs, Capital Improvements,Deprececiaton Allowed or Allowable,
Sale Price of home, selling expenses
Once you put in depreciation allowed or allowable it put that to Section 1250 Gain now matter what.
Drake is a hit or miss.Comment
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