As an example, you and your partner purchased the rental property for $400,000. You own 50% of the investment or $200,000.
You are allowed to depreciate 100% of the $200,000 cost basis in the rental property.
Am I suppose to reduce the value of the home by half so that it calculates the correct amount ? Why wouldn’t TurboTax do that automatically? I told it I own 50 percent of the property.
Should I also only list 50 percent of the value of the house when it asks for the fair market value ?
If you own 50% of a rental property, there are two ways to report it. You can do what it sounds like you are trying to do and report 50% of the rental property on your personal tax return. The other way is to treat it as a partnership and report 100% on Form 1065 and then issuing each of you a K-1 with your share of income and expenses. If you report 50% on your return then you should treat your 50% as a whole rental property. You will set it with a cost basis of 50% of actual. The program won't calculate depreciation based on your ownership percentage. It will calculate it on whatever you enter as the cost basis.