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wdakak
New Member

Last 5 years did not use depreciation as a deduction on my rental property. Can i start using this deduction on 2016 taxes? Is it going to be acceptable by the IRS ?

I did not take advantage of the Depreciation Deduction on my rental property. As a result i was showing income generation from renting the property. I want to start taking advantage of this deduction. I tried it on my 2016 Tax return and i had losses on my rental income as a reason for taking the deduction. Is it ok to start deduction depreciation even though i have not done it before? 

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3 Replies
PaulaM
Expert Alumni

Last 5 years did not use depreciation as a deduction on my rental property. Can i start using this deduction on 2016 taxes? Is it going to be acceptable by the IRS ?

Yes, you can (and should) take the depreciation deduction for your rental (the 2016 share for 2016). When you are ready to sell your property, the IRS will recapture the depreciation (whether you take the deduction or not) and tax a portion of it.

Because you have not taken depreciation in the past, considering amending your prior year's returns and take the appropriate depreciation expense. Losses are not necessarily a concern on rentals (due to depreciation) and it is quite common in the early years of operation.

https://ttlc.intuit.com/questions/1894381-how-to-amend-change-or-correct-a-return-you-already-filed

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PaulaM
Expert Alumni

Last 5 years did not use depreciation as a deduction on my rental property. Can i start using this deduction on 2016 taxes? Is it going to be acceptable by the IRS ?

Instead of amending the prior returns, you may also consider filing Form 3115. This form will allow to take all of the prior year's depreciation combined.
See this IRS website for Form 3115 - <a rel="nofollow" target="_blank" href="http://www.irs.gov/pub/irs-pdf/f3115.pdf">http://www.irs.gov/pub/irs-pdf/f3115.pdf</a>
See this IRS website for Form 3115 instructions - <a rel="nofollow" target="_blank" href="http://www.irs.gov/pub/irs-pdf/i3115.pdf">http://www.irs.gov/pub/irs-pdf/i3115.pdf</a>
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Carl
Level 15

Last 5 years did not use depreciation as a deduction on my rental property. Can i start using this deduction on 2016 taxes? Is it going to be acceptable by the IRS ?

First, lets confirm beyond all doubt that depreciation was not taken. If TurboTax was used in past years, and it was used the way it's designed and intended to be used, it's perfectly possible that depreciation *was* taken, and the tax filer doesn't even realize it.  If it's confirmed it wasn't taken, then since it's been more than 3 years without taking it, there's additional information that applies, and matters big time. But no since in covering it, if depreciation was "in fact" taken.
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