Can I take depreciation starting now for the next 27.5 years if I forgot to take it on my rental property for the last 15 years? Will it be the basis from 15 years ago?

[SweetieJean · Accepted solution]

If you were entitled to claim depreciation (such as on rental property or business assets) but did not, you can fix it by filing a form 3115, which is a depreciation correction form.  But it is very complicated and will probably require an accountant to get it right for you.

https://www.irs.gov/forms-pubs/about-form-3115

[TaxGuyBill]

I agree, go to a tax professional this year.

[George966]

mmmh,  are you sure?
I thought I do not need a Form 3115 because:
publication 946 says: >> ”Making a late depreciation election or ….blablabla   ..is not an accounting method change.  Generally, you must get IRS approval to make a late depreciation election or ….bla bla bla.   You must submit a request for a letter ruling to make a late election “ <<  

In other words, since the accounting method did not change, I would only need a “Letter of Approval” from the IRS but not a Form 3115.

Isn’t  a  “late depreciation election” the same as having forgotten to claim depreciation?  I might agree that I could also fix the issue by filing a complicated Form 3115, but a “Letter of Approval” should suffice it as well.
Please let me know if I am mistaken.

[TaxGuyBill]

Depreciation is not an election, it is a requirement.  Form 3115 is required because not claiming depreciation is an "impermissible" method of accounting.  Form 3115 is what needs to be filed to correct your mistake.  Go to a tax professional.

As for "only" needing a "Letter of Approval", I had to laugh (no offense meant).  (1) The process for a letter ruling is much more complex than Form 3115.  (2)  You need to meet specific requirements to qualify for it, and (3) Although the fees vary for various circumstances, the IRS fee for a Private Letter Ruling can be $28,300 (plus the cost of hiring a tax professional to do it right, because if you do it wrong, you don't get the $28,300 refunded).