If I only rented out my rental for 2 months and had it advertised for rent for 5 months, do I get a full year of depreciation on my rental property?

[doug12]

Turbo Tax is giving me a full year of depreciation on my rental property which was rented out for 2 months (62 days) and advertised as for rent for 5 months (121 days).  I only entered the Schedule E expenses for the months the single family home was advertised or rented (7 months or 183 days).  Example, I used 183/365 x property taxes to get my number.   

Turbo Tax is using a full year of depreciation for the rental house, stove, refrigerator, etc. just like last year.  Do I still get a full year of depreciation even though the home was empty and not advertised?

[PatriciaV]

How many days did you report that the property was rented?

[doug12]

January 2015 & December 2015 (62 days)  I listed for rent for 121 days of the year and listed for sale for 5 months while is was empty.

[doug12]

Rented it for 62 days, listed "for rent" 121 days, and listed "for sale" for ~150 days while it was empty.  I did not list it for rent while it was for sale.

[PatriciaV · Accepted solution]

No, you should report depreciation expense only for the period that the asset was considered a rental property.

In addition to reporting the number of days it was rented, you also need to reduce the percentage business use for the asset itself. This appears during the interview under Sale of Property/Depreciation. Click "Edit" beside the property you wish to change and continue until you see the page titled "Tell Us About This Rental Asset."

At the bottom of the page, indicate that you have not always used the asset 100% (see screenshot below - click to enlarge). This will open a drop-down where you can change the percentage business use. This would be the number of days or months the property was rented or available to be rented as a percentage of the total year (days or months).

After you change this value, check to be sure the depreciation expense is correctly allocated.

[doug12]

For the past 2 to 3 years the house, refrigerator, stove, carpet, etc. have been depreciated as100% business use items.  I have "zero personal day use".  They were purchased for business use and are only being used for the business.  Why would they not be considered depreciable business items for the entire year?

[PatriciaV]

What was happening during the five months the property was not rented or advertised to be rented? Did you stop using the property as a rental or was it vacant for some other reason?

You may continue to claim depreciation on business property if it is temporarily not in use, with the expectation that you will return it to service at some point. If you took the property out of service (stopped using it in your business), you may not claim further depreciation.

You may be able to deduct your ordinary and necessary expenses (including depreciation) for managing, conserving, or maintaining the property while the property is vacant. In this case, you would claim a full year of depreciation.

[doug12]

While, the rental property was vacant and not listed for rent it was staged by a realtor and advertised for sale for 5 months.  The rental property was being shown weekly, sometimes multiply times weekly.  After it did not sell, the rental property was rented out again December 1, 2015 and currently has tenants.  

The use of the property has never changed, it is used only as a business.  The rental property was put into service in 2011 and has never been used for any personal purposes.

Can I continue to deduct a full year of depreciation?

[PatriciaV]

Yes, under these circumstances, a full year of depreciation is appropriate.

[doug12]

Hi Patricia, Sorry I wasn't more clear in the beginning.  Thank you for your patients and help.  Doug