Since I didn't use TT in previous years, it has no record of the improvements that I've made. How do I enter this into TT? Will that change the depreciation amount?
First, lets confirm a few things beyond any doubt.
In your 2020 tax return package (which I assume you have a copy of) look for and pull out these documents.
- Two form 4562's that print in landscape format. One is titled "Depreciation and Amortization Report" and the other is "Alternative Minimum Tax Depreciation report"
- IRS Form 8582 titled "Passive Activity Loss Limitations". If you don't have this document, then most likely you you did not have any unallowed losses on your rental property in 2020. Not common, but not impossible either due to some changes in the tax law that took effect in 2018.
On the 4562 titled Depreciation and Amortization Report, I expect you to see at a minimum, the property itself listed there. I also expect you to see any property improvements that you paid for since converting the property to a rental. You "might" also see property improvements you paid for before converting it to a rental, unless the cost of those improvements were already included in the "Cost (Net of Land)" box for the property itself.
So are you seeing what I expect? (I really hope so. Otherwise, you have a problem that we may or may not be able to take care of.)
