Planning to offer accelerated depreciation via cost seg? Couldn't use TT this year because linear depreciation over 27.5 years for a rental property was the only option.

[Carl]

For domestic rental property you are required to depreciate it over 27.5 years. So I'm not clear on what you're referring to by "cost seg". Can you clarify please? If whatever it is you're wanting to do is legal, TurboTax can handle it. (with extremely rare exceptions). It's just a matter of knowing how to enter it in the program.

[alik-levin]

Cost segregation is accelerated depreciation where property broken into components that depreciate over 5 years (ex, carpet), over 15 years (ex, fence), and 27.5 years (structure). I have report with this breakdown. How do I punch it in TT?

[pk]

So what you are talking about is using the life of each asset on its own  and the bare building on its own --- I understand  that method.  If this is your first year on TurboTax  then you have to  set each depreciable asset as a different asset i.e. segregate / allocate   depreciable basis   ( cost, life class, put in service date etc. ) and the  bare building as a 27.5 year  life.  To me while this method is helpful in getting faster depreciation of the components, when you sell the property  you may end up with a possible bigger gain  and possibly less with capital treatment ( all  gain  attributable to depreciation must be treated as ordinary gain )

If this is not your first year i.e. you have been using one method of depreciation and want to change method then you need to get IRS approval ( I do not remember the form number  ).

Which is your case ?

[alik-levin]

I am aware of depreciation recapture risk but thank you for reminding me!
IRS approval aside 🙂
How do I punch in the numbers in TT?

[alik-levin]

And even more interesting question, will TT be able to recognize components that depreciate over 5 and 15 years as eligible for bonus depreciation at 100% write off in first year?

[Carl]

So I don't see what makes you think TTX can't handle that. It can do so jut fine without breaking a sweat. You don't even need to do anything special such as entering something as an "other asset type".

[alik-levin]

I start seeing it now! Thank you 😄

[Carl]

Yep, it's there! But don't feel bad. On occasion I myself forget that I can see better with my eyes, than I can with my tongue or fingers. 🙂

[Anonymous]

you enter each component and assign it a life or designate as land. 

thus if you have 7 components (land and building included - land just to keep track of cost) you would have 7 asset entries.

if this is property acquired and depreciated in a prior year you can't change without filing form 3115.    

[alik-levin]

Got it, thank you!!

[mteam]

How do I enter the results for my Cost Segregation Study in TT? I purchased a vacation rental in 2019 so this is a new set up and I do not want to ONLY utilize the straight line 27.5 yr deprecation. I also want to use accelerated deprecation. Also, my property management company entered Gross Rents in Box 3 of my 1099-MISC they sent me and TT does not allow that entry. Do I just enter my Box 3 amounts in TT's Box 1? Please help!

[AmeliesUncle]

@mteam   You just enter each "asset" separately.

Sure, that will work for the 1099-MISC.  There really isn't even a need to report a 1099-MISC.  You can just report it as cash income for the rental.

However, because they sent you a 1099-MISC with the income in Box 3, the IRS might sent you a notice because the IRS computer doesn't "see" that income where Box 3 income usually goes.  If that happens, just respond to the notice indicating that was rental income reported on Schedule E.

[nanosuna1977]

Hello everyone. 

Does anyone know how to change a property which has been previously depreciated in turbotax to using cost segregation/bonus appreciation for 2021?  I noticed the thread said  the form 3115 is needed, can anyone let me know how this is done on turbotax or what process needs to be done to do this?  thanks for your help

[MarilynG1]

Bonus Depreciation is only offered the first year you put an Asset in Service.

Click this link for more info on Filing Form 3115.

Here's helpful detail on Depreciation of Business Assets.