Line 18 should never have to be changed or split up. The depreciation should be calculated by entering half the cost of the rental on each daughter's return. If this is corrected in the asset section of the rental on each return the correct depreciation will populate on each return, each year.
The DeMinimis Safe Harbor (DMSH) is not the only expense that can be listed on line 19. The fact the the sisters own the house 50/50 doesn't mean they can take double the $2,500 threshold. It's the same house and the same rental so if the expenses are greater than $2,500 then they must depreciate the assets. @MonikaK1 described in the detail the DMSH, which applies to assets, other than the building itself.
The other option, if there are capital improvements, would be the Safe Harbor Election for Small Taxpayers
Here are the rules you need to meet to take this election for capital improvement:
- Your gross receipts, including all your other income, are $10,000,000 or less.
- Your eligible building has an unadjusted basis of $1,000,000 or less.
- The cost of all repairs, maintenance and improvements is less than or equal to the smallest of these limits:
- 2% of the unadjusted basis of your building or
- $10,000
If you find you do qualify for this option and you want to take the full expense in one year for capital improvements, use the steps below to enter it in your return. Again, keep in mind this is one property, being divided by two taxpayers.
@GGBJr
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