Adding back depreciation for rental property

[jyeh74]

So my friend forgot to add depreciation for one of her rental properties last year. When she amends her taxes and adds depreciation, what does that do for her rental income? Does it decrease her net rental income?

[MinhT]

When she amends her tax return to add depreciation on her rental property, her rental income will decrease as she has added depreciation to her rental expenses.

The equation is: Rental income = Gross rents - Rental expenses.

[jyeh74]

@TurboTaxMinhT So depreciation is considered a rental expense?

[MinhT]

Yes.

[jyeh74]

@TurboTaxMinhT I don’t think depreciation is actually an expense like a cash expense like management fees or HOA. From what I understand and talking to other folks. Depreciation doesn’t reduce your net rental income, but it does reduce your taxable income.

[MinhT]

Depreciation is an expense which is reported on Schedule E. Please see line 18 of Schedule E: <a rel="nofollow" target="_blank" href="https://www.irs.gov/pub/irs-pdf/f1040se.pdf">https://www.irs.gov/pub/irs-pdf/f1040se.pdf</a>