I would like to know how to depreciate a rental property that was rented out years ago, then stopped being rented for years, and then rented out again after a break in between rental periods of many years.
I purchased my condo on 05/29/2001 to rent out. I rented it out 08/01/2001-08/03/2003. I treated it as a second home 08/04/2003-06/30/2021. I rented it out again 07/01/2021-present.
I researched this in 2021 when the property became a rental again, but I think I misunderstood what I read since on reviewing my 2021 tax return I can't determine how Turbotax came up with the depreciation amount. I looked at my 2021 tax return in-depth (which I should have done before filing it) because on my draft 2022 tax return Turbotax has a much larger depreciation amount that I also have no idea how it was computed.
I thought that I could just pick up my depreciation in 2021 as though it was the 4th year on the 27.5 depreciation schedule, but something else is going on. The Asset Entry worksheet shows 22 as the year of depreciation, but how can that be since I only rented the condo for 4 years (2001-2003, 2021)? It looks like because Turbotax used 22 years the AMT depreciation amount is kicking in since Turbotax applied an AMT adjustment to my depreciation which makes the depreciation amount much larger.
I am still researching what the AMT adjustment is on depreciation, but is it right that even though my condo was only rented 4 years with an 18 gap between the first 3 years and CY2021 that I need to include the depreciate the gap period too?
Thanks.
