I have a rental property and Turbo Tax is using the AMT depreciation instead of the standard depreciation.

[dbarboro]

I have a rental property and Turbo Tax is using the AMT depreciation instead of the standard depreciation. I am nowhere near the AMT limit. The AMT depreciation deduction is $1200 less than the standard. How do i fix this. I cant see anyway to change this or manually adjust the amount.

[DianeW777]

No, the depreciation does not have a different amount for AMT than is used for regular depreciation. 

The method of depreciation for residential rental property is 27.5 year recovery and this is the same for both regular depreciation and AMT depreciation. There is no excess of what is allowed for AMT based on the straight line recovery method required under tax law. This is not a new tax law. It actually began in 1986.

If you've had this rental property for more than one year, you can take the house cost and divide by 27.5 years. This should give you a very close (within a couple dollars) of the amount of allowed depreciation for the year.

• IRS Publication 946

Please provide additional details so that we might provide specific details for your situation.

[dbarboro]

The basis is $164,000 and business use is 93.85% so the depreciable basis is $153,914 at 27.5 years that should be $5596 for the current year. Instead for some reason Turbo Tax is using the AMT calculation which deducts $1324 and arrives at $4,272 for depreciation. Why is it using the AMT amount?

[DianeW777]

If you would like to send us a “diagnostic” file that has your “numbers” but not your personal information it would help.  If you would like to do this, here are the instructions:  (Don't forget to give us the state)

TurboTax Online:

Open your return -Go to the menu panel on the left side of your return and select Tax Tools. 

1. Then select Tools below Tax Tools.
2. A window will pop up which says Tools Center.  
3. On this screen, select Share my file with Agent.
4. You will see a message explaining what the diagnostic copy is.  Click okay through this screen and then you will get a Token number.
5. Reply to this thread with your Token number and your state. This will allow us to open a copy of your return without seeing any personal information.

TurboTax Desktop:

If you like, you can send a copy of your return that will be scrubbed to eliminate your personal data by using these steps:

1. Click on Online in the top left menu of TurboTax Desktop for Windows
2. Select 'Send Tax File to Agent'* > Follow the prompts to reach the token number.
   • Enter your email used for TurboTax > Enter your code > Send
3. Write down or send an image of your token number and state then place in this issue.
4. We can then review your exact scenario for a solution.
5. Please also tell us any states included in the return. This is necessary for us to view the return.
   • *If using a MAC, go to the menu at the top of the screen, select Help, then, 'Send Tax File to Agent')

We will be able to see exactly what you are seeing and we can determine what exactly is going on in your return to provide you with a resolution.

@dbarboro 

[dbarboro]

Ok, done. turbo tax token number 9411819557185985-49851639.

Thanks.

[dbarboro]

turbo tax token number [phone number removed][phone number removed].

[dbarboro]

turbo tax token number "9411819557185985-49851639" State IL.

[dbarboro]

it wont let me post the token number? How do i fix that?

[DianeW777]

After review of your return I discover that the prior depreciation has been changed, which may mean that you actually had some years where the rental use was 100%, it's not clear.  Thank you for providing your token.

If I leave the calculated prior depreciation (accumulated total prior to 2025), then the total depreciation for 2025 is what is expected, however if I change it to the amount you indicated as the accumulated depreciation (higher than TurboTax calculates it) then the depreciation for the current year is the amount you show in your screen images.  The system is calculating in the background to account for the excess of depreciation in prior years with the limited knowledge you enter. Calculations can only take place based on the information provided. This is the reason TurboTax creates a difference between regular and alternative minimum tax (AMT) depreciation figures.

If the prior accumulated depreciation is correct, then you should leave the lower amount calculated for 2025. Continue to keep all of your prior depreciation records so that you are prepared when and if you should sell this building.

Some questions are not answered in the Step-by-Step, however it is not causing the figures you see. For example if you go to the Property Profile, this is where you enter the passive activity loss (PAL) carryover from Form 8582 for last year.

I notice that qualified business income is selected for your property.  Here is information regarding that so you are clear it does apply to you.

Generally, a rental property does not carry the time requirements to be considered as eligible for the qualified business income deduction (QBID).

• Can I get QBID for rental property income?

Generally, this means each rental real estate enterprise (a rental property or group of similar rental properties, including K-1 rental income) must satisfy these three requirements:

1. Each enterprise maintains its own books and records to track income and expenses.
2. An enterprise that has existed less than four years performs at least 250 hours of rental services per year. For an enterprise in existence for four years or more, this test needs to be met for any three of the five consecutive taxable years ending with the taxable year.
3. (Starting with tax year 2019) Contemporaneous records of services performed are kept which includes who performed the service, description of service, the date of the service, and how long it took (who, what, when, and how long).

@dbarboro 

[dbarboro]

Is there a way to see how prior appreciation was adjusted. I certainly dont recall doing that and i know my accumulated depreciation is not ahead of what it should be. 

Can this be adjusted? Can i see the history of prior depreciation?

[AmyC]

To see exactly what has been claimed in the past, you need the Depreciation and Amortization Report. It is a worksheet, not part of the tax return.

Desktop:

1. Go to Forms Mode (top right corner).
2. In the list on the left, look for the Asset Entry Worksheet for your property.
3. Scroll down to the Depreciation History section. It will show you year-by-year what was claimed for both Regular and AMT.

Online:

1. You must go to Tax Tools > Print Center.
2. Select "Print, save or preview this year's return" 
3. If you have not paid, select pay now.
4. Choose the option Include worksheets.
5. Search the PDF for "Depreciation and Amortization Report." This table lists "Prior Accumulation" and "Current Depreciation."

[dbarboro]

are you still there?

[dbarboro]

The only report I see is under schedule E, Asset wks (for this rental property). Then i have to go to line 15 quick zoom (asset life history). But that only shows the yearly allowable depreciation. Not the actual depreciation taken each year. And that depreciation schedule is showing the amount based on this years business usage % which changes every year.

How do I see the actual depreciation taken each year??

[PatriciaV]

Do you have a follow up question to the previous response?

[dbarboro]

Yes, posted this earlier:

The only report I see is under schedule E, Asset wks (for this rental property). Then i have to go to line 15 quick zoom (asset life history). But that only shows the yearly allowable depreciation. Not the actual depreciation taken each year. And that depreciation schedule is showing the amount based on this years business usage % which changes every year.

How do I see the actual depreciation taken each year??