Depreciation

[outacontrol2]

We own a home which has a 1 bedroom basement apartment which we rented in 2021. I want to depreciate a portion of the property. I understand turbo tax can do this calculation for me but in 2022 the home will be a complete rental for which I can depreciate the whole property. I just want to make sure I will be able to convert to this when I do my 2022 taxes.

[Carl]

Let's assume a 50% split.

On your 2021 tax return you'll show 50% of your primary residence rented out.

In 2022 when you rent out the other half, you will simply add the other 50% as it's own physically separate asset in the assets/depreciation section.

Now there's many ways to do do this actually. I just pointed out what I think is the simplest. What works for you, may not be what is the simplest for me. But yes, your desired end result is perfectly doable in TTX.

[Cynthiad66]

To depreciate the apartment you will need to determine the square feet of the rental space and the total square fee of the home.  Use the percentage of the rental apartment for determining your depreciable basis for 2021.  When you rent the entire space in 2022 use the remainder basis for that depreciation as if a separate property.

Where to enter rental income and expenses on TurboTax:

• Go to My Account > Tools > Topic Search
• Type rental in the search box and click Go.
• Answer Yes to Do you want to review your rental and royalty information.
• Proceed through the entire interview to enter your rental property information and enter income and expenses.

You will lalso have to consider the split for common expenses like mortgage interest, insurance etc for 2021.  

Use this link for additional information on rental properties.  Rental Income and Expenses IRS

@outacontrol2

[outacontrol2]

Thank you so much. Just what I needed to know