ADS (alternative depreciation) for foreign rental results in $0 expense

[chammer8o]

Hi,

we have an apartment in Germany, for which we have rental income (since 2011). For depreciation, I chose asset type "other", 27.5 years (Residential rental), but my estimated expense for 2019 is $0. When looking into the details, it says MACRS Convention = MM, but the Depreciation Method column is empty.

On our return from last year, prepared by a company in the context of our relocation, it was "ADS".

How can I apply the same information this year?

I'm using the online version of Turbotax. Happy to change to the download version, if this works better, but before buying it I'd like to make sure it will work.

Thanks a lot for your help,

Chris

[pk]

@chammer8o , without knowing more about how your return was filed  --- I see two issues you need to look into -->

(a) because your rental was in operation since 2011, if you enter that date as your start date , for US purposes the  rental start would be 2011 and thus there will be accumulated depreciation for the  the years 2100 through 2017.  So you need to see what your preparer did  last year --- did you use  xx/xx /2018 as your start of rental ( that is from the date you entered the US tax system )  or did you recognize accumulated depreciation for the past years. 

(b)  Till 2017 the foreign  based rental ( residential )  property  used to be depreciated using MACRS with a life of 39.5 years   From 2018  it allowed ADS with 27.5 years -- the earlier ones were grandfathered  and allowed to continue ( safe harbor )  What did you use last year.

When you ADS, you use  Straight Line depreciation -- so TurboTax is waiting for you to choose  the method --- you need to select Straight Line and not  other methods.

[chammer8o]

@pk 01/01/2018 was used as start date, with 27.5 years. So if I use this information, I still can't choose "ADS" or "Straight Line" anywhere. 

I did the following:

Land component of asset: No

Describe: intangibles, other property (because not in US)

this asset: other

enter description, cost, and acqusition date (01/01/2018)

100% used for business, from 01/01/2018

Asset class: 27.5 years (Residential Rental)

Recovery period: 40 years

enter amount of depreciation in prior years: ok

And this results in $0 estimated expense. When I look into the details, it says MM for MACRS convention, but depreciation method is empty. I can't select "straight line" or "ADS" anywhere.

Thanks,

Chris

[pk]

@chammer8o , here is what I did ( I have CD-Windows version of Home & Business )  ---in the business section under income selected that I have rental income --- then followed the screens to declare that this residential  rental property, address etc.  FOREIGN i.e. not on US or its possessions , then on to declare the   renal income, the  expenses and to depreciation -- asset worksheet -- acquired  on 12/31/2012,  start of rental on 01/01/2018,  zero land value, acquisition cost $300,000  etc. etc. --- TurboTax automatically chose  MACRS -MM ( mid-month convention ), ALT method -- life 30 years  --- result depreciation / asset life history  is correct --   accumulated ( for 2018 ) $9583  and for  2019  $10,000.   So it works as it should 

Now we need to find out about why you are not seeing the same result -- I do not know about the on-line version but should operate the same 

Try deleting all the rental data  and start afresh and  see what it does --- note that you will need to declare the address as foreign ( by selecting the box  and then foreign address entry form will show up and also  that you started the business on 01/01/2018 ---- your prepare should have used  30 years last year or  40 years life not  27.5