Airbnb Schedule C Depreciation (Residential Property) MARCS27.5 not showing up

[firedrake123]

For my wife's airbnb, we have to file taxes as business. This requires us to file Schedule C. Previously in another tax software we could depreciate the airbnb property as Residential Rental Property which takes MACRS27.5 depreciation. However, turbotax is not giving me the option to select his but only nonresidential property. Where is this going wrong?

[dodgers90210]

According to the irs it's not a rental activity if the average period of customer use is 7 days or less and if it's not and you report it on SCH C you have to use non residential property for depreciation.....you have a hotel and that's not residential rental property it's commercial property.

[Anonymous]

commercial real estate is depreciated over 39 years. 

[firedrake123]

Ok so if we change to 39 years now, will that be a problem?? (turbotax does ask for what was claimed before).  Or we have to amend the past 1.5 year tax return???

[ThomasM125 · Accepted solution]

If you provide services, such as maid services and food, then the rental activity is considered a business as opposed to a rental activity, so that is what is prompting the schedule C to be prepared. Also, the short period of rental would be a factor.

You can't simply adjust depreciation in the current year to account for errors in previous years without doing a complicated change in accounting method adjustment. You can go back to previous years and amend those returns to reflect the correct depreciation however.

For 2019, you should enter the cost of the property when you set up the asset worksheet, and calculate the prior years accumulated depreciation by taking the cost basis and dividing it by 39 years to get the yearly depreciation amount, and use that to calculate what the previous years depreciation should have been. 

TurboTax may also calculate that amount for you, based on your answers to the questions in the program.