I think I may have made some mistakes on my previous tax returns regarding how depreciation expenses and depletion were calculated for my rental property.
Background: I originally purchased my house in 2015 as my primary residence. In May 2021, I did a cash-out refinance. The loan amount was $360,000, and the house was appraised at $520,000. I converted the property into a rental on June 1, 2022. However I notice while preparing for this years return “Tell us about this rental asset,” I wasn’t sure how to calculate the property’s value. I came across a screen in TurboTax asking me to confirm prior depreciation. TurboTax calculated a total depreciation from previous years to $5,427. However When I looked at my past returns, Line 18 on Schedule E (Depreciation/Depletion) is blank for both 2022 and 2023. Did I miss claiming depreciation in those years? If so, do I need to amend those returns?
Schedule E from last year 2023 Tax return.
Rental income: $26,100
Expenses: $824 for insurance, $11,234 for mortgage interest, $385 for repairs, $318 for supplies, $5,387 for property taxes, $323 for utilities for a Total expenses: $18,471
It showed me having a net income of $7,629.
I live in San Diego, where land often costs more than the house itself.
My 2024 property tax shows $279,000 for land and $130,000 for the house. I don’t have the 2022 property tax statement handy, but I’ll find it. Am I losing out on approximately $3000 - 4,000ish in depreciation from previous years? If so, how can I fix this? Any guidance would be greatly appreciated!
