Prior depreciation on foreign rental income

[copperbottom8]

I moved to the US in 2014 and started claiming depreciation on my UK rental property from this year. I started renting my property out in 2011. Is it correct that "prior depreciation" before 2014 is 0, as I never filed a US tax return or claimed this?

[DS30]

Yes - You would only need to actually start to recognize depreciation on your foreign rental property starting in the first year that you are required to report this foreign rental property on a US income tax return (when you are considered a US resident for US filing purposes). Therefore the amount of "prior deprecation" for any period prior to including this foreign rental on your US income tax return would be $0.

Please note - When you are including this foreign rental property on your US income tax return for the first time, make sure that you are depreciating the foreign rental over a 40 year useful life (as opposed to a US located rental which is over a 27.5 year useful life). You may need to use the TurboTax Desktop version to be able to make this election.

[BCW]

Foreign Rental property depreciation schedule uses the "Alternative Depreciation System" or ADS, which is either 30 for Residential Rental or 40 years for Commercial Rental property. 

[Carl]

To further clarify:

Using an in service date of 2011 will 'FORCE" the program to take the last 9 years of depreciation on your 2019 return, and that would not be correct. If you change the depreciation amount, you may not be able to e-file. Chances are also high your return will be flagged for review (and possible audit) by the IRS.

So on your U.S. tax return the "in service" date will be Jan 1 of the tax year you were required to file a U.S. tax return, or whatever date you were required to start reporting all world wide income to the IRS.

If that in service date is on or after Jan 1, 2018, the property will be depreciated over 30 years.

If that in service date is "before" 2018, then it gets depreciated over 40 years.

I can't find any other way the TurboTax program will handle the depreciation correctly for your situation.