Investors & landlords

Yes, you can prepare an amendment for your 2022 tax return to catch up on all the missing depreciation. Wait until your tax return is processed before you prepare your amendment. You need to complete a Form 3115 - Application for Change in Accounting Method since you have never depreciated your rental real estate. This allows you to make the adjustment on your current year tax return to deduct the missing depreciation. The reason you are adopting a change in your accounting method is because you didn’t claim depreciation for two or more years which indicates that you were using an accounting method without depreciation, so you change your accounting method to include depreciation.

You can only prepare Form 3115 in TurboTax Desktop. Follow the instructions below:

1. Select View from the top toolbar
2. Then select Forms
3. Select Open Form and type 3115
4. Select Form 3115, p1-3: Change in Accounting Method and select Open Form
5. Complete these lines and boxes:
6. Tax year of change: Enter current year
7. Type of applicant: Choose what type of entity you are
8. Type of accounting method change: Select Depreciation or amortization
9. Part I: For question 1(a) DCN: Type in 7
10. Answer questions 2 and 3
11. Part II: Answer questions
12. Part IV, question 25: Select No (to get to Part IV, you might have to select QuickZoom at the bottom of the form)
13. Question 26: Enter the depreciation adjustment amount 
14. Question 27: Answer No
15. Answer question 28
16. Skip to Page 8, Schedule E Change in Depreciation or Amortization and complete the section (you might have to select QuickZoom at the bottom of the form again)

Please review the TurboTax Help article What should I do if I didn’t take depreciation on my rental property? for additional instructions and How to File an Amended Tax Return with the IRS.