Rental Propery Depreciation expense!!

Hello,

It looks I missed to take depreciation on my rental property in FY 2017 tax. Can you pls suggest, If I may need to fill amendment OR I may adjust this to next year (2018 tax).  Here is the scenario on my rental property:

The tax assessor's estimate of building value estimate is $392,700. My depreciation expense that you take each year against rental income would be $392,700 divided by the IRS allowed 27.5 years of useful life (residential real estate) for a depreciation expense each year of $14280.00

In Year 2017 Tax year. This property was rented out for 6 months (half year). So for Year 2017, I may take depreciation expense as $14280.00 / 2 = $7140.00.

Please confirm if this calculation is correct?  and I may take this expense deduction next year in 2018?

Thanks in advance!! 

Ravindra Kumar

Investors & landlords

Critter covered most of this, but here are the answers to your questions:

(1)  You must amend.  It can not be added to your 2018 tax return.
(2)  Your depreciable Basis is the LOWER of (1) your Adjusted Basis (usually your original purchase price plus cost of improvements), and (2) the Fair Market Value when you converted it to a rental.  Then the cost of land is subtracted from that amount.  So if your Adjusted Basis is lower than the Fair Market Value, the tax assessor's estimate does not matter.
(3)  The first month only gets a half of a month of depreciation.  So if it was "placed in service" in July, you will get 5.5 months of depreciation.
(4)  Your situation seems to keep changing.  Two months ago you said it was rented for 2 months, then you said 3 months, now you are saying 6 months.

Investors & landlords

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Investors & landlords

First the program will compute the correct depreciation when you enter the required info in the asset section of the Sch E section  ... and second you must amend the 2017 return to correct this error.   If this property was rented out only 1/2 the year and you converted it from personal use then read the screens carefully AND review the return carefully as well. 


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