@michash2998 wrote:
To be more precise,
- tax year 2018, entered purchase price of $385k as cost and started depreciation of just the property portion without land
- tax year 2018, entered closing cost of $12k as an additional asset and started depreciation
- tax year 2019, brought new water heater of $900 as an additional asset and started depreciation
can I amend tax for the last 4 years to enter the purchase price plus depreciable closing cost as the new cost for year 2018 and start depreciation on that amount excluding land?
can I amend 2019 tax return to remove the water heater as depreciable asset and enter it as expense instead?
And then amend each subsequent year accordingly?
will the above action provide me with the correct cost basis and amount for depreciation recap when I enter the sale of this rental closing in Oct 2022 with a gain?
Thanks,
Monita
Assuming the above to be true:
- tax year 2018, entered purchase price of $385k as cost and started depreciation of just the property portion without land
- tax year 2018, entered closing cost of $12k as an additional asset and started depreciation
If you depreciated the building only after subtracting the cost of the land, this is a no harm-no foul error. Your depreciation would be the same whether you entered the closing costs as part of the house or as a separate asset, since they have the same recovery period. I agree with @Anonymous_
- tax year 2019, brought new water heater of $900 as an additional asset and started depreciation
This is allowable, although you could have taken the safe harbor instead.
can I amend 2019 tax return to remove the water heater as depreciable asset and enter it as expense instead?
And then amend each subsequent year accordingly?
I think is going to be a no, because you changed your mind after more than 2 years, but I am open to alternative interpretations.
