Is accumulated depreciation on a rental property identified anywhere in my prior year tax return?

[tagteam]

In TurboTax, that figure will appear on two worksheets; the Asset Entry Worksheet and the Depreciation and Amortization Report.

[tim-nusraty]

Thanks, but I can’t seem to find that information in my 2018 filed federal tax return that I downloaded from TurboTax

[tim-nusraty]

Hi, Can you please help point out where precisely accumulated depreciation is reflected on my federal return? Just to clarify, accumulated since purchase 3 years ago so as to determine cost basis. Thank you

[Carl]

Prior year depreciation is not reflected anywhere on the SCH E or the 1040. Only the current year's "allowed" depreciation is shown on SCH E line 18. For prior year depreciation you have to look at the IRS Form 4562 which is *NOT* filed with your tax return unless there is a change to or the additional/removal of an asset.

Now there are three 4562's and they are not all the same. One prints in portrait format and is generated *only* if there is a change. The other two print in landscape format and are only printed when you elect the option to print/save *ALL" forms and worksheets. One of those two is titled "Amortization & Depreciation Report" and is the one you're most likely interested in. The other is titled "Alternative Minimum Tax Depreciation Report" and only comes into play for less than 5% of those reporting rental income. So you want the first one mentioned that prints in landscape format.

[Carl]

Now when looking at the 2017 IRS Form 4562, to get your prior year's depreciation for 2018, you have to add together the amounts in the "Prior year depr" and "current year depr" in order to get the total prior year's depreciation for your 2018 tax return.

[tim-nusraty]

Super helpful! Just one question, I only have the option to “download “ from the website, not print or save “All” forms.

[wiseman]

You mean to say, there is a line in the IRS form 4562 which states cumulative depreciation for any given investment  property? Could you please provide more details.  such form number and line number.

I notice accumulated losses for a property upto last year, current year and carried forward losses (In form 8582) but I do not notice any accumulated depreciation anywhere.  I wonder when we sell a property after several years, are we supposed to pull out the IRS tax returns of the year we purchased the specific property and add the depreciation year after year  to derive the depreciation recapture amount?

[Carl]

There are actually 3 IRS form 4562's, and for the totals you seek you're only interested in one of them. Of the 3 forms, two of those 4562's print in landscape format. One is titled "Depreciation and Amortization Report" and the other is "Alternative Minimum Tax Depreciation". The first one will show you current year depreciation for each asset listed on that form, as well as the total of all prior years depreciation already taken on each individual asset listed.

[wiseman]

Thank you Carl. so this is a turbotax specific additional report and not part of regular IRS forms or worksheet?

[tagteam]

The reports are TurboTax-specific reports and not the official form.

See https://www.irs.gov/pub/irs-pdf/f4562.pdf

[wiseman]

Thank you and good to know. That is a great custom turbotax report. It will be very handy to calculate depreciation recapturing details when we sell an investment property.  It would save time  otherwise going through several past years returns and forms I guess to derive the depreciation recapturing numbers.

[Carl]

Carl. so this is a turbotax specific additional report and not part of regular IRS forms or worksheet?

The one that gets filed with the tax return prints in portrait format, and can be seen at https://www.irs.gov/pub/irs-pdf/f4562.pdf. This one doesn't always have all the details folks are usually looking for.

[tagteam]

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@Carl wrote:

The one that gets filed with the tax return prints in portrait format, and can be seen at https://www.irs.gov/pub/irs-pdf/f4562.pdf. 

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Form 4562 only gets filed in certain circumstances, which are limited to:

• Depreciation for property placed in service during the 2020 tax year.

• A section 179 expense deduction (which may include a carryover from a previous year).

• Depreciation on any vehicle or other listed property (regardless of when it was placed in service).

• A deduction for any vehicle reported on a form other than Schedule C (Form 1040), Profit or Loss From Business.

• Any depreciation on a corporate income tax return (other than Form 1120-S).

• Amortization of costs that begins during the 2020 tax year.

[tagteam]

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@Carl wrote:

Carl. so this is a turbotax specific additional report and not part of regular IRS forms or worksheet?

Those two versions I pointed out are official IRS forms.

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The depreciation and amortization reports are not official IRS forms; they are specific to TurboTax. 

Various other tax preparation software programs have different forms, worksheets, and/or reports.