Hi there,
Last year, I hired a CPA to help me with my tax return because I discovered that depreciating rental property is a requirement, and I wasn’t familiar with the process. Here’s what the CPA did for my two rental properties:
- For the property I acquired in 2014, the CPA used the straight-line depreciation method over a 27.5-year period. However, they set the prior depreciation to 7 times the depreciation per year amount because I hadn’t depreciated this property in the past.
- For the property I acquired in 2020, the CPA also used the straight-line depreciation method over a 27.5-year period. The prior depreciation was set to zero, but they applied bonus depreciation at a rate of 3 times the depreciation value per year.
I’ve recently learned from the Intuit community that for real estate investments, the Modified Accelerated Cost Recovery System (MACRS) is a more appropriate depreciation method. Additionally, I believe that Form 3115 should have been submitted with my tax return since it represented a change in accounting method. However, my CPA did not include Form 3115 in the 2023 return.
Now, I’m wondering what my options are. Should I continue using the same straight-line depreciation method or should I have my CPA rectify the mistakes made in the previous year’s return? I would appreciate your advice on this matter.
