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Determining rental property depreciation

I had an accountant do my taxes for the last 3 years and he deducted $3221, $8574 and $8574 respectively.  After I put in all the numbers (Price, yr bought, yr in service, % of business, etc.)  in TurboTax this year, it's telling the depreciation is only $4772?  Is this correct?  

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Accepted Solutions
AmyC
Employee Tax Expert

Determining rental property depreciation

Depreciation is taken over 27.5 years, straight line method. This means whatever you paid for the house and land minus the land value plus improvements equals your basis in the house to depreciate. For example: You purchase for $150,000 and add a room for $20,000. You have $170,000 invested but land does not go down in value, say it was worth $15,000. Then you would depreciate $170,000-$15,000 = $155,000. Take that and divide by 27.5 to get how much per year except for the beginning and ending years.So, for this example: $1558,000 divided by 27.5 = $5,636 per year for depreciation for all years except the first and last.

 

Your depreciation was the same for years 2 and 3, which it should be. You may need to review the first year and see what was entered for the numbers. Perhaps the land was accidentally left in or you did an improvement and did not add it to Turbo Tax.  

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2 Replies

Determining rental property depreciation

Unless you tell us what those numbers are (Price, yr bought, yr in service, % of business, etc.), there is no way anybody could tell you if it is correct or not.

 

Was it rented all year?

AmyC
Employee Tax Expert

Determining rental property depreciation

Depreciation is taken over 27.5 years, straight line method. This means whatever you paid for the house and land minus the land value plus improvements equals your basis in the house to depreciate. For example: You purchase for $150,000 and add a room for $20,000. You have $170,000 invested but land does not go down in value, say it was worth $15,000. Then you would depreciate $170,000-$15,000 = $155,000. Take that and divide by 27.5 to get how much per year except for the beginning and ending years.So, for this example: $1558,000 divided by 27.5 = $5,636 per year for depreciation for all years except the first and last.

 

Your depreciation was the same for years 2 and 3, which it should be. You may need to review the first year and see what was entered for the numbers. Perhaps the land was accidentally left in or you did an improvement and did not add it to Turbo Tax.  

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