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connorbenvenuti
New Member

How do I change the useful life of a depreciation item on a rental property? Previous tax preparer used different life on assets than TurboTax allows. Able to override?

Appliances were coded as 7 year useful life, flooring (permanent) was coded as 10, cabinets as 10 years
7 Replies
AnnetteB
Intuit Alumni

How do I change the useful life of a depreciation item on a rental property? Previous tax preparer used different life on assets than TurboTax allows. Able to override?

Trying to match depreciation methods that are already being used can be a little bit tricky.  In order to accomplish this, you will follow these instructions:

  • Starting from the Rental Properties and Royalties selection under income, choose Update or Review to get to the details about your rental.

  • Proceed to the Rental and Royalty Summary page, then Edit your rental property.

  • Proceed through the questions until you reach the Review Your ___ Rental Summary page, then Start or Update the Assets/Depreciation section.

  • Proceed to the point where you adding an asset on the page titled Describe This Asset.

  • In order to enter the asset exactly as it has been reported in the past, choose the last option on the list, Intangibles, Other Property, then click Continue.

  • On the next page titled, Tell Us a Little More, select Other asset type, then click Continue.

  • Enter the detailed information about the asset:  description, cost, date purchased or acquired.  Click Continue.

  • Continue with additional details on the next screen, then click Continue.

  • Select the appropriate Asset Class, then click Continue.

  • Choose the MACRS Convention, then click Continue.

  • Select the Depreciation Method, then click Continue.

  • Answer the question regarding Listed Property, then click Continue.  There may be some additional background questions as well, keep going.

  • You will eventually come to a screen to confirm the Prior Depreciation, enter the data and click Continue.

  • Finally, you will see an Asset Summary screen with the current year depreciation amount listed.  There is also a check-box here to Show Details.  This will open a full description for the asset so you can verify that it matches the previously reported information.  If it does not, you can choose to go Back and re-enter the data that needs to be changed. 


bsilverttt
Level 2

How do I change the useful life of a depreciation item on a rental property? Previous tax preparer used different life on assets than TurboTax allows. Able to override?

In TT 2020 it seems that entering "No Entry" brings the years to fully depreciate to 27.5 years, MACRS becomes MM and Depreciation Method becomes SL, which is exactly what I've been doing for years.

gloriah5200
Expert Alumni

How do I change the useful life of a depreciation item on a rental property? Previous tax preparer used different life on assets than TurboTax allows. Able to override?

Just a reminder that if you have been depreciating an asset for the wrong class life, you have two options:

 

If you have been doing it wrong for only 2 years, then you can amend the back year returns to correct and then go forward correctly.

 

If you have been doing it incorrectly for more than 2 years, in order to correct it, you will have to use IRS Form 3115 to Change the Accounting Method and adjust depreciation taken in year discovered and then future years can be handled correctly.

 

Please see information on Form 3115:

 

IRS Form 3115, Change in Accounting Method

bsilverttt
Level 2

How do I change the useful life of a depreciation item on a rental property? Previous tax preparer used different life on assets than TurboTax allows. Able to override?

I've been depreciating this property on a 27.5 term for 16 years without a problem, and with several certified accountants doing it for me in this manner. They showed me the IRS documents on this. It's a right way to do it.

 

Question is, how to get turbotax to accept it.

Carl
Level 15

How do I change the useful life of a depreciation item on a rental property? Previous tax preparer used different life on assets than TurboTax allows. Able to override?

One thing that was not clarified for you.

You can not just arbitrarily change the useful life of an asset. The examples you provided are perfectly legal too. You need to continue depreciation on them using the same MACRS depreciation schedule they were started with. Just use the guidance provided by AnnettB to enter them so you continue depreciating them the same as you have been in the past.

 

bsilverttt
Level 2

How do I change the useful life of a depreciation item on a rental property? Previous tax preparer used different life on assets than TurboTax allows. Able to override?

Did find how to set the schedule according to the last 16 years of returns. Thanks!

Carl
Level 15

How do I change the useful life of a depreciation item on a rental property? Previous tax preparer used different life on assets than TurboTax allows. Able to override?

@bsilverttt did you not read this whole thread? AnnettB's post above tells you exactly how to do it, step by step.

 

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