Am I misunderstanding something,
Yep. I see it in these and other forums almost every year. The problem is business use percentage. The program is asking you the business use percentage *AFTER* you converted it to a rental. I seriously doubt there was any personal use after the conversion date. So the business use percentage would be 100% and nothing less.
If you put 50% business use, then you get a first year depreciation amount of half what it should be. That's what happened to you. Glad you got it fixed though.
Now there are other possible issues that you may not have caught yet. So confirm you answered all the questions right and made all the correct selection with the guidance I'm providing below. There are some areas of the program that in my personal opinion (and we all know what opinions are like!) the necessary clarity is not provided to the user, to ensure they fully understand what information is being asked for. This lack of clarity usually results in the user providing a wrong answer or incorrect data, and they don't even know it. Some screens the clarity *is* provided. But it's provided in the small print. I see a lot of situations where the user just flat out did not read the small print. That hurts them down the road.
Rental Property Dates & Numbers That Matter.
Date of Conversion - If this was your primary residence or 2nd home before, then this date is the day AFTER you moved out, or the date you decided to lease the property – whichever is later.
In Service Date - This is the date a renter "could" have moved in. Usually, this date is the day you put the FOR RENT sign in the front yard.
Number of days Rented - the day count for this starts from the first day a renter was contracted to move in, and/or "could" have moved in. That would be your "in service" date or after if you were asked for that. Vacant periods between renters do not count for actual days rented. Please see IRS Publication927 page 17 at https://www.irs.gov/pub/irs-pdf/p527.pdf#en_US_2020_publink1000219175 Read the “Example” in the third column.
Days of Personal Use - This number will be a big fat ZERO. Read the screen. It's asking for the number of days *YOU* lived in the property AFTER you converted it to a rental. I seriously doubt (though it is possible) that you lived in the house (or space, if renting a part of your home) as your primary residence, 2nd home, or any other personal use reasons after you converted it to a rental.
Business Use Percentage. 100%. I'll put that in words so there's no doubt I didn't make a typo here. One Hundred Percent. After you converted this property or space to rental use, it was one hundred percent business use. What you used it for prior to the date of conversion doesn't count.
