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pnico123
New Member

I've owned a rental property since 2011, I just realized that none of my turbotax prepared returns since then have been depreciating the property. What should I do now?

 
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Opus 17
Level 15

I've owned a rental property since 2011, I just realized that none of my turbotax prepared returns since then have been depreciating the property. What should I do now?

 You should probably see an accountant. There is a special tax form to correct depreciation mistakes but it is complicated and usually requires an accountant's expertise to prepare. 

 Without an accountant, you could prepare and file amended tax returns for 2014, 2015 and 2016 to include the depreciation. It is too late to amend for earlier years.   This would get you some of the depreciation that you have missed. However, when you sell the properties, you would have to pay recapture tax on all the depreciation you could have taken, including the depreciation that you missed for 2011 through 2013.  So you would have to think about the cost in taxes of the missed depreciation for those years compared to the cost of having an accountant fix those years for you. 

*Answers are correct to the best of my ability at the time of posting but do not constitute legal or tax advice.*

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2 Replies
Opus 17
Level 15

I've owned a rental property since 2011, I just realized that none of my turbotax prepared returns since then have been depreciating the property. What should I do now?

 You should probably see an accountant. There is a special tax form to correct depreciation mistakes but it is complicated and usually requires an accountant's expertise to prepare. 

 Without an accountant, you could prepare and file amended tax returns for 2014, 2015 and 2016 to include the depreciation. It is too late to amend for earlier years.   This would get you some of the depreciation that you have missed. However, when you sell the properties, you would have to pay recapture tax on all the depreciation you could have taken, including the depreciation that you missed for 2011 through 2013.  So you would have to think about the cost in taxes of the missed depreciation for those years compared to the cost of having an accountant fix those years for you. 

*Answers are correct to the best of my ability at the time of posting but do not constitute legal or tax advice.*

View solution in original post

TaxGuyBill
Level 9

I've owned a rental property since 2011, I just realized that none of my turbotax prepared returns since then have been depreciating the property. What should I do now?

I agree, go to a tax professional that knows how to fill out Form 3115 (many don't know how to do it).

Although the IRS probably wouldn't raise a fuss, you technically can't amend your 2014-2016 returns to fix those years.  Form 3115 is the only way, and it will fix everything.

Just be aware that the cost to prepare Form 3115 may not be low-cost.  Also, it is filed WITH your tax return, so usually the tax preparer will do your entire tax return, including Form 3115.
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