Re-calculate depreciation every year?

sviyer · ‎April 5, 2021

I started renting my property in 2019 and calculated depreciation for my 2019 returns. To do this, I used my original home cost, original home buying fees, improvements, determined % of building vs land from 2019 property taxes etc. etc.

The property was still rented for the whole of 2020. Turbo-tax has automatically filled in the depreciation for 2020, based on my 2019 information.

My question is, is this correct? Or, do I need to re-calculate depreciation based on my 2020 property taxes etc. I also refinanced in 2020. Does this affect the depreciation calculations? Or can I just use the value pre-computed by turbo-tax?

Thanks!

AnnetteB6 · ‎April 6, 2021

Yes, it is correct. You can use the value pre-computed by TurboTax. You do not adjust the depreciable basis each year. It will be automatically calculated each year based on the information entered for the year the property was placed in service as a rental.

Refinancing the property does not affect the depreciation calculation.

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View solution in original post

Carl · ‎April 6, 2021

The basis used for depreciation is figured in the first year the property is available for rent. After that first year, that basis will never change for so long as you own the property, unless something occurs requiring it to change. For example, fire, hurricane or some other disaster that damages the property. But even then, that initial entry you made for the property back in 2019 in TurboTax 2019 will never change for any reason. If something happens requiring a change in your cost basis, then the originally entry will be "dealt with" accordingly, and a completely new entry with the new cost basis would be entered into the program in the tax year the change in basis occurs.

Re-calculate depreciation every year?

Investors & landlords

Investors & landlords