We have a vacation home with mixed (and variable) business vs. personal use. I don’t understand the depreciation amount that TurboTax is calculating, and was hoping somebody could explain this for me.
Building value is $73,548, purchased and started using for business 8/4/11.
As residential real estate located outside the USA, depreciation is via MACRS with ALT over 40 years with mid-month convention.
Business use percentage for 2021 is 36.36%
TurboTax calculates what prior depreciation would have been if this business use percentage had been the same every year. I understand this calculation:
Base Annual Depreciation = $73,548/40 = $1,839
2011 = $1,839 * 4.5/12 (for mid-month convention) * 36.36% = $251
2012-2020 = 9 * $1,839 * 36.36% = 6,018
Total Prior Depreciation = $251 + $6,018 = $6,269
Depreciation for 2021 = $1,839 * 36.36% = $669
However since business use has varied I need to adjust the total prior depreciation from $6,269 to $7,075.
TurboTax then calculates Depreciation for 2021 = $642
How is this calculated? Thanks in advance for your insight.
