Entering depreciation info for Boiler for apt. house

[Raeka]

We have a boiler for heat in our apt. house. I'm adding purchases for it to dep. schedule in TT.

Under the "Describe this asset:" screen, do I choose Rental Real Estate property (top of list
of choices) or Tools, Machinery, Equipment, Furniture
near bottom of choice list?

Depending on which I choose, I'll get two different screens when I click continue.
So then when it goes to next screen, which category should I choose?

None of them really seem spot on for this.

Over the past 28 years, the boiler is still on the books with some depreciation left as of last tax year. It was depreciated over 27 years.

Thank you for any help!

[Carl]

Since the new boiler became "a physical part of" the structure when it was installed, it gets classified as Residential Rental Real Estate and depreciated over 27.5 years with the depreciation for that boiler starting on the date it was placed in service.

Over the past 28 years, the boiler is still on the books with some depreciation left as of last tax year.

Am I to assume this is the old boiler that was replaced with a new boiler in 2020? Am I to further assume that you entered that old boiler as it's own asset 28 years ago? If both assumptions are correct, then that boiler "should" be fully depreciated. (or it will be when you indicate it was removed from service.)

Edit the old boiler and work it through. Select the option to indicate that you stopped using that specific asset in 2020. When asked, enter the date you stopped using it in the rental (which would be the day it broke I presume?)  Somewhere in the process of working it through you'll be presented it screen asking "Special Handling Required?" Click YES on that screen. If you click no, then you will be *forced* to enter sales information for that boiler. I seriously doubt you sold a non-functioning asset.

The final screen will show you the depreciation on the old boiler for 2020, up to the time it was removed from service. I fully expect it will show it as being fully depreciated. If that's the case, then you "MUST" leave that old boiler asset on your 2020 tax return so it's reported to the IRS that it's fully depreciated and no longer in use as a rental asset. Then, if that old boiler is transferred into your 2021 tax return *next* *year*, you can just delete it from your 2021 tax return *next* *year*.

[Raeka]

No, the boiler was installed  in 9/30/1994 and is the same boiler we still have.

It has had work/new parts added from that installation date to 11/29/1994 which are on the table as well.

We have it if we ever need it but don't really use it anymore. Its a back up in case. But the depreciation schedule I was given from CPA for 2019 shows it was depreciated over 27 years and as of 2019  the depreciation table still shows $242 is left for it. The initial cost which was $6,662. The other amts. that are on the table are smaller but each one has some amt. left on the dep. table. No zeros.

When I add these to TT, when I finish adding, TT will show that it was depreciated 30 years or if I choose other options, it will say it was depreciated over 7 years, depending on which options I pick. None show 27 years.

We have not really "stopped" using it. If our current electric water heater goes out, we have a like new oil based water heater that would use the boiler to work.

I just need to know which options to pick on the TT boxes.

[ColeenD3 · Accepted solution]

Consider it a Rental Real Estate improvement to get the 27.5 year useful life.

[Raeka]

Thank you but I need little more help. First screen is "Describe your asset". First option is Rental Real Estate property. Click that?
If so, the next box is: "how would you categorize this asset?"

None seem to fit. But if I choose "Residential Real Estate", that will give 27.5 years. Its only one that does so that is one I should pick? It asks for land value which I left blank. 

[Carl]

the boiler was installed in 9/30/1994 and is the same boiler we still have.

So you did "NOT" purchase a brand spanking new boiler in 2020, remove the old boiler and install a new one? That being the case, you need to ignore absolutely everything already told to you by myself and others in this thread. What you have is "NOT" entered anywhere in the assets section. Absolutely nothing changes for the asset under any conditions.  Assuming you paid to fix it in 2020, t's a repair cost and that cost is 100% deductible in full on your 2020 tax return. Period. End of Story. What you paid to fix it is entered in the rental expenses section in the box for Maintenance/repairs. Absolutely nothing what-so-ever changes on your 4562.

You have nothing new to depreciate, and the boiler has what I assume is less than one more year of depreciation before it is completely and totally depreciated.

Otherwise, if I'm wrong on the above, you have really confused the issue now.

[Carl]

Maybe this will clarify things for whatever the situation may be?
Describe this asset:  Enter every single character for that asset that appears under the 'DESCRIPTION' column of the 2019 form 4562. What you enter here needs to match the 2019 description column *exactly* for that asset.

[Raeka]

I don't think I confused the issue.

The CPA has kept this boiler on depreciation schedule based upon 27 year depreciation.  It has little bit left on the purchases and will soon be down to zero but is not at zero yet. I asked question above because I'm setting TT up for first time and entering all my dep. schedule assets.

thanks for input!

[Raeka]

When I enter the depreciation for all prior years, I'm looking at the 2019 depreciation table. If the last column has an amount in there, do I add the prior years to that figure to enter it on the 2020 return or do I just enter the amount on all prior years on 2019 table without adding that last column or "current" value.

[Carl]

When I enter the depreciation for all prior years, I'm looking at the 2019 depreciation table.

No. Don't look at "any" tables. Look at the 2019 form 4562. On that 2019 form 4562 add together the amounts in the "prior years depreciation" column and "current year depreciation" column. Enter the total on your 2020 tax return where it asks for the total of prior year's depreciation already taken.

[Raeka]

They (prior accountants) did show my depreciation amounts on that form. They would never fit. I have to refer to the table he gives me. They did not use TT.

[Raeka]

In fact, TT instructions even tell me to refer to any depreciation table. It states (copy and pasted):

"To locate the depreciation for an asset on prior-year returns, look at the prior-year depreciation report for the asset, if available. If you used TurboTax last year, the program generated a depreciation report.

If a depreciation report is not available, review the detail for Form 4562, Depreciation and Amortization, and total the depreciation taken for the asset on all prior returns.

[Carl]

Right. It tells you to do exactly what I said to do. Nowhere is the word "table" found. I was concerned you might be looking at 2019 tax tables or the 2019 asset depreciation tables on the IRS website or in one of the IRS publications. That would be wrong.

[Raeka]

Repeating my question for anyone who knows:

 "When I enter the depreciation for all prior years, I'm looking at the 2019 depreciation table. If the last column has an amount in there, do I add the prior years to that figure to enter it on the 2020 return or do I just enter the amount on all "prior" years listed on 2019 table without adding that last column or "current" value." "

I.e., I am not sure if that "current" value on the 2019's table was taken on the 2019 return so that I need to add it to the column for "prior years" to get the total I should use for TT.

[Carl]

do I add the prior years to that figure to enter it on the 2020 return

Yes.