catch up depreciation

[nessanewf]

My husband and I bought a rental home in July of 2016.  There was a renter in the house which we continued on with until  August of 2017 when they moved out.   We had to do some reno/remodel  (almost $10K) work on the house from September of 2017 until February of 2018 when we rented it out again.   We never added the cost of these improvements to our 2017 or 2018 returns for depreciation.  Can we do this now, for our 2019 return or do we have to file amended returns for those years instead?  

Thank you in advance for your reply!!

[Anonymous_ · Accepted solution]

Since you did not take depreciation deductions on consecutive returns (spanning two or more tax years), your only option is to file Form 3115 (see link below) and make an adjustment for the total foregone depreciation deductions.

https://www.irs.gov/instructions/i3115#idm140516453720416

Note that you cannot simply file amended returns in this scenario.

See https://www.irs.gov/pub/irs-tege/n96-30.pdf and https://www.bradfordtaxinstitute.com/Endnotes/Rev_Proc_2015-13.pdf

Also note that professional tax guidance is recommended when the preparation of Form 3115 is involved.

[nessanewf]

I was just reading about this form 3115 and yes, apparently we should have some professional tax guidance!!

Thanks so much!