Depreciation on Rental property - changes after re...
Sign Up

Why sign in to the Community?

  • Submit a question
  • Check your notifications
or and start working on your taxes
Announcements
TurboTax has you covered during Covid. Get the latest stimulus info here.
cancel
Showing results for 
Search instead for 
Did you mean: 
ssnewton
Returning Member

Depreciation on Rental property - changes after refinancing

In 2019 we bought a property that we used as a short term rental.  Since this was new for us we used a tax prep service last year.    So last year, our taxes start taking depreciation on the property over 27.5 years at a rate of 2.273.  This spring, we refinanced.  

 

When I go under the  Assets/Depreciation of the property section it does not give me the option to depreciate the unit (part of a multiunit complex).  Currently we have a net loss with the property in Turbotax.  Did the refinancing affect our ability to claim depreciation, is it not an option since we are at a loss or am I doing something incorrectly?

 

Thanks!

6 Replies
ColeenD3
Employee Tax Expert

Depreciation on Rental property - changes after refinancing

No, refinancing doesn't affect anything. Explain what you mean by short-term rental. Is there any personal use? You say it is part of a multi-unit. Does this mean that you have a condo in a building of other condos? Is it a multi-unit where you live in one of the units and rent the other?

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
Carl
Level 15

Depreciation on Rental property - changes after refinancing

You are depreciating the property based on what you *originally* paid for the property, or it's FMV on the date placed in service. Whichever is "LOWER".

Refinancing a business property has absolutely no effect on your cost basis used for depreciation. Nothing changes on that front.

ssnewton
Returning Member

Depreciation on Rental property - changes after refinancing

It is a condo in a building with other condos.  We use it less than 14 days for personal use.  We do not live there, we live a little over 2 hours away.  

ssnewton
Returning Member

Depreciation on Rental property - changes after refinancing

Our original tax person we used last year based it on the amount paid for the property.  

 

So why won't Turbotax run me through the depreciation?

ssnewton
Returning Member

Depreciation on Rental property - changes after refinancing

I figured it out.

 

I went back into the depreciation section.  Within this section it had the refinance as a single item in the property.  I then had to add a second addition into the same property that allowed me to enter the original value of the property and depreciate it as before.

 

Thanks!

Carl
Level 15

Depreciation on Rental property - changes after refinancing

Are you sure that single item wasn't your refi costs? When you refinance, your refi costs (usually called points) are amortized and deducted over the life of the new loan. The original asset entry does not change at all.

add a second addition into the same property that allowed me to enter the original value of the property and depreciate it as before.

What do you mean by second addition to depreciate? There is nothing to add to be depreciated. The only thing to add are your refi costs if the program did not add them for you automatically. Then your refi costs are amortized and deducted over the life of the loan. They are "not" depreciated.

 

Dynamic AdsDynamic Ads
v
Privacy Settings