Dear Patricia:
Thanks so much for the expert advice.
For clarification only: instead of claiming about $4000 depreciation each year for the rental, I've been claiming less than $1600 since 2011. This was due to the error where I mistakenly entered my own improvement amount of ~$10K (repairs and adding 2 rooms in the basement) before renting the house into the "building" amount ~100K into Turbo-tax. I believe I should get refunds for this and that's why I'm trying to fix this problem.
I have 2 questions:
Question 1:
If I don't do anything, I will loose approximately the following amount of depreciation deduction for 27.5 years (4000-1600) x 27.5 = $66000. Is this correct? In this case, after 27.5 years when I sell the rental, I assume the government only recapture the actual depreciation (1600x27.5). Is this also correct?
Question 2:
In case I want to amend, I think you're suggesting:
File 3 1040X forms for 2019, 2020 and 2021, one after another in the next 2 weeks and submit them all before submitting the 2022 taxes. Also, in the 2022 taxes, use the new depreciation values, overriding the default calculated by Turbo-tax. In this case, I can use Turbo-tax for these 3 years to amend each of them separately.
What I'm unclear about is that the house was rented out in 2011 and I'm amending now in 2022. I think I must consider the deductions for the last 8 years from 2011-2018 irrecoverably fixed (unchanged) and in the amending 1040X starting 2019, subtracting the total depreciation of those 8 years from the correct total building value to be entered into Turbo-tax 2019 and let Turbo-tax recalculate the new depreciation in the next 16.5 years. If this is correct, the new/correct depreciation for this rental will be the same in the new value for 1040X for 2019, 2020 and 2021 and also in the upcoming 2022 taxes, even though the accumulated values are different.
Your response and clarifications are deeply appreciated since time is running out for me for the 2022 tax filing.
Again, thanks so much for your help.
Best regards,
Chris
