How can i deduct the depreciation expense for the rental home

[RonG]

According to the IRS, you recover the cost of income producing property through yearly tax deductions. You do this by depreciating the property; that is, by deducting some of the cost each year on your tax return.

Depreciation relates to the useful life of the rental house. The IRS allows you to deduct the depreciation on your rental against your other rental expenses. It is always best to calculate and take your rental depreciation ever year that you have your rental house available for rent since the IRS will assume that you are taking depreciation on your rental regardless of if you actually take it.

Please refer to this IRS link for more information about rental properties:

https://www.irs.gov/publications/p527/ch02.html

You will need to enter your asset (rental house) information into TurboTax under the asset section of Rentals in order for the system to calculate your rental depreciation for the year.

To enter your rental asset in TurboTax Online or Desktop, please follow these steps:

1. Once you are in your tax return, click on the “Federal Taxes” tab ("Business" tab in TurboTax Home & Business)
2. Next click on “Wages & Income” ("Business Income and Expense" in TurboTax Home & Business)
3. Next click on “I’ll choose what I work on”
4. Scroll down the screen until to come to the section “Rental Properties and Royalties”
5. Choose “Rental Properties and Royalties” and select “start’ (or “update” is you have already worked on this section)

Enter your rental property information through the TurboTax guided questions until you come to a screen that is titled, Your "rental property name" rental summary. You will enter your rental property house here under "assets/depreciation" (see screenshot)

You need to enter your rental house as an asset (27.5 yr straight line) under this section for TurboTax to calculate your correct depreciation. TurboTax will guide you to first report the total cost of the property then ask you to report the land separately (because land is not depreciable).

[rickperryz]

I followed the instructions, depreciating the house and appliances according to their schedules and came up with $5400 in depreciation; however, when I click 'Done', depreciation expense shows up as $0. Do I claim it somewhere else? Only the basement (about 40% of the building) is being rented.

[Critter]

Did you enter in personal use days ?  If so the program is treating it as a vacation rental. 

[Carl]

When renting out a part of your primary residence, you are asked three questions, of which at least one or more you probably answered wrong. Here's the correct answers.

Business Use Percentage - This is ONE HUNDRED PERCENT. You may only be renting out 40% of your primary residence. But that 40% is ONE HUNDRED PERCENT business use.

Personal Use Days - Should be ZERO. Of that 40% you are renting out, it was was used for ZERO days for personal purposes of any type, after you converted it to rental.

Days Rented - The day count starts on the first day a renter "could" have moved in. So if a renter could have moved in on July 1, 2019, (which would be the "in service" date, or date available for rent) the days rented is 183 days. No more. No less. Doesn't matter if it took you three months to actually get a renter in their either.

[rickperryz]

Percentage - that was it. Thank you very much!