Currently, the TurboTax system automatically calculates my depreciation based on the building basis and a useful life of 27.5 years. However, I did a cost segregation study, so there is accelerated deprecation. Can you please advise how to capture this accelerated depreciation amount in TurboTax?
A cost segregation study tells you how to segregate specific aspects of any rental property, such as appliances and carpet. You don't accelerate the building. If you made improvements after the purchase, you would automatically segregate them. If you just bought the building and wish to segregate a specific asset, then you need to determine which they are and enter them separately from the house.
I agree - my question was around how to change the Building deprecation that is being auto-calculated by TurboTax.
It seems like you would have to first delete the auto-calculated deprecation. Then, go into Asset Summary and manually enter a new line item for the building/house.
How is it structured? Did you just buy it or have you had it for some time? You would leave the house as it is, just change the basis to reflect the assets you are removing.
What assets do you have? Is it really worth your time to do this? How much are you going to gain by doing so?
It's 100% worth it! Cost segregation + 100% bonus depreciation 🙂
Property was acquired in 2020 and used as rental from Day 1.
Good. You just have to find a way to allocate a reasonable amount to each asset and subtract it from the purchase price. It will be easy since this was the year of purchase.
"Is it really worth it?" Cost segregation studies which enable accelerated depreciation can save a taxpayer tens of thousands of dollars in depreciation on just a $1M purchase. Yes it's worth it!
Ok ... the assets are still being depreciated only faster ... so I am not sure where you believe this saves you from having to recapture depreciation in the future when the assets are retired or sold.
https://sobelcollc.com/articles/cost-segregation-study-it-worth-effort
Hi There. I am trying to do exactly the same as you with a cost segregation. Can we chat to exchange ideas? Were you able to figure out how to incorporate the cost segregation analysis in TurboTax? My email is [PII Removed]. [phone number removed]. Thanks in advance Orlando
The answers are all in the previous posts. Some highlights:
Ok ... the assets are still being depreciated only faster ... so I am not sure where you believe this saves you from having to recapture depreciation in the future when the assets are retired or sold.
I am working with a company that specializes in doing those type of analysis. Just Google cost segregation study in your area and you will find companies that do so. Hope this helps
Thanks, do you know if bonus appreciation can be done using TurboTax? I'm using the online version.
Yes, you can take bonus depreciation in TurboTax.
Special depreciation allowance
The code provision permitting this deduction is § 168(k). So now, in year 2021, businesses may potentially receive a 100% deduction of the cost of “qualified business property”—after first applying any applicable §179 deduction
Thanks for your prompt replies Coleen. Are there any differences in the version of Turbotax? Im asking this since im pretty much done inputting all the info in the online version, but I still have to add the cost segregation to it. Are there any differences in what I can do relating to bonus depreciation in the different versions i.e. online vs desktop? I have older properties that will need a change in depreciation method (it will need form 3115) for example.
thanks again.
There are no essential differences between how the Desktop and Online versions handle taxes, but one benefit of the Desktop is that you can view your forms along the way instead of at the end when you pay. You can also handle certain circumstances more easily in Desktop.
Form 3115 is not available through TurboTax. You will either need a tax professional or do it by hand.
Below are the IRS links related to the change in accounting method. TurboTax does not have that form.
Maybe these will help.
Form 3115, Application for Change in Accounting Method
Instructions for Form 3115
Form 3115,
Hi Coleen,
I am trying to figure out what 179 deductions are. I googled it but I am still not clear. Would you mind elaborate on what this is?
thanks again
Of Course. The Section 179 expense election is a choice you have the first year certain property is placed in service. This allows you to take all or a portion of the cost of depreciable property instead of depreciating it over the life of the asset. The most common is tangible personal property. The details are discussed in the publication below, page 15.
Section 179 allows taxpayers to deduct the cost of certain property as an expense when the property is placed in service. For tax years beginning after 2017, the TCJA increased the maximum Section 179 expense deduction from $500,000 to $1 million.
The phase-out limit increased from $2 million to $2.5 million. These amounts are indexed for inflation for tax years beginning after 2018.
Do you know how to use 5 yr and 15 yr depreciation assets in Turbo Tax for properties that were purchased before 202,1 so that the full amount spent on these assets can be taken as bonus appreciation for the 2021 tax year?
When I input these items in turbo tax, it automatically spreads the deduction over 5 years or 15 years respectively for properties bought before 2021. For properties bought in 2021, it works just fine and I can take the full amount as bonus appreciation for 2021.
Hello,
Just reading this thread from 2021. I am trying to input a cost segregation study for a newly acquired property that was put in place during 2021 and an older property that was put in place in 2019.
I'm struggling a bit with how to get this done in the turbotax online platform. Based on this thread was anyone successful in getting this entered correctly, and if so how/ where did you do this on turbotax?
Feedback is much appreciated.
The two properties must be entered separately. They were not placed in service the same year, so each has a different recovery beginning and ending period. Enter each asset with the date placed in service and the type of property. If this is real estate they must be entered separately for the same reason.
For property placed in service prior to the current year, and if Section 179 had not been elected in the first year, then it cannot be elected in any succeeding year. Only property placed in service in the current year, that is not real property can use Section 179, election for 2021.
@nanosuna1977
Please update here if you need further assistance.
@DianeW777 , somewhat related question for you. I did a cost seg study on a property, and I’m inputting the various line items in TT - 5 Year items, 15 year items, and then the 39 year items (Short term rental commercial property). I noticed for the 1st line item of the 5 year items, it gave me the recommended option to use the Section 179 for 100 depreciation but when inputting the 15 year item, it didn’t have Section 179 as an option and instead had the ‘Special Depreciation’ option, which I chose. So I have the 5 year items set as Section 179 and the 15 year item as Special Depreciation and then the rest over 39 years. Does this sound right to you? Thanks!
This is correct. The 15 year items are eligible for bonus depreciation as opposed to section 179. You have done everything correctly.