Correct under-depreciation on rental homes and boot from 1031X from many years ago

[calderosa77]

I need help on how to enter data in TurboTax Premier – Desktop to correct the errors described below.  I discovered the errors in 2024 because in 2024 we sold one of the rental houses that we acquired in 2005.  

2005: We did a 1031 exchange and sold one rental home and replaced it with two rental homes.  I made the following errors:

• I did not properly fill out form 8828 and under-reported a small boot. How do I correct this in 2024?
• I underreported the exchanged basis from the relinquished property and also did not enter a new asset for the excess basis, which has resulted in under-depreciation for around $31K for the last 18.5 years.  Please note that we sold this property in 2024 via a 1031 exchange and we acquired two rental homes.  
  • How do I correct the under-depreciation for the last 18.5 years?
  • How do I correct the exchange basis from 2005 into the two new properties we acquired in 2024 so that I don't keep on under-depreciating the assets for the remaining useful lives.
  • How do I correct the excess new asset from 2005 that I never entered in TT to take the proper depreciation for the last 18.5 years, and to carry the cost basis to the properties bought in 2024 thru the 1031X?

2005: The second property that we also bough with the same exchange was also under-reported in cost basis, and I have under depreciated this second property for about $28K. Please note that we owned and rented this second property in 2024 but sold it in 2025. How do I correct the under-depreciation for this property for the last 18.5 years, and the cost basis carried in TT?

I will highly appreciate help.  Thanks.

[DianeW777]

The various discoveries and required corrections for the 2024 1031 exchange is quite detailed and complicated. The cost basis and depreciable basis are affected for the timeframe you indicate. For this reason, it is best advised to consult a tax attorney for 2024 and then, in 2025, you can resume completing your own tax return.

[AmeliesUncle]

While I disagree with the prior answer about going to a tax attorney (unless you are going to court or have non-tax legal problems connected with this), I agree that you should go to a good tax professional this year. 

File an extension, pay what you think you should owe (and go high, if there is any question) and schedule an appointment in May with a good tax professional that is experienced with 1031 Exchanges and with the possibility of correcting depreciation mistakes.