Hi, I did a cost segregation study, so there is accelerated deprecation. Can you please advise how to reflect the accelerated depreciation in the TurboTax system?

[userdanloadirect]

Currently, the TurboTax system automatically calculates my depreciation based on the building basis and a useful life of 27.5 years. However, I did a cost segregation study, so there is accelerated deprecation. Can you please advise how to capture this accelerated depreciation amount in TurboTax?

[ColeenD3]

A cost segregation study tells you how to segregate specific aspects of any rental property, such as appliances and carpet. You don't accelerate the building. If you made improvements after the purchase, you would automatically segregate them. If you just bought the building and wish to segregate a specific asset, then you need to determine which they are and enter them separately from the house.

[userdanloadirect]

I agree - my question was around how to change the Building deprecation that is being auto-calculated by TurboTax.

It seems like you would have to first delete the auto-calculated deprecation. Then, go into Asset Summary and manually enter a new line item for the building/house.

[ColeenD3]

How is it structured? Did you just buy it or have you had it for some time? You would leave the house as it is, just change the basis to reflect the assets you are removing. 

What assets do you have? Is it really worth your time to do this? How much are you going to gain by doing so?

[userdanloadirect]

It's 100% worth it! Cost segregation + 100% bonus depreciation 🙂

Property was acquired in 2020 and used as rental from Day 1.

[ColeenD3]

Good. You just have to find a way to allocate a reasonable amount to each asset and subtract it from the purchase price. It will be easy since this was the year of purchase.

[chrisoleary99]

"Is it really worth it?" Cost segregation studies which enable accelerated depreciation can save a taxpayer tens of thousands of dollars in depreciation on just a $1M purchase. Yes it's worth it! 

[Critter-3]

Ok ... the assets are still being depreciated only faster ... so I am not sure where you believe this saves you from  having to recapture depreciation in the future when the assets are retired or  sold.  

https://sobelcollc.com/articles/cost-segregation-study-it-worth-effort

[nanosuna1977]

Hi There.  I am trying to do exactly the same as you with a cost segregation.  Can we chat to exchange ideas?  Were you able to figure out how to incorporate the cost segregation analysis in TurboTax?  My email is [PII Removed].  [phone number removed]. Thanks in advance  Orlando

[ColeenD3]

The answers are all in the previous posts. Some highlights:

• A cost segregation study tells you how to segregate specific aspects of any rental property, such as appliances and carpet. You don't accelerate the building. If you made improvements after the purchase, you would automatically segregate them. If you just bought the building and wish to segregate a specific asset, then you need to determine which they are and enter them separately from the house.
• You just have to find a way to allocate a reasonable amount to each asset and subtract it from the purchase price
• From @CRitter3: 

  Ok ... the assets are still being depreciated only faster ... so I am not sure where you believe this saves you from  having to recapture depreciation in the future when the assets are retired or sold.  

  Cost Segregation 

[Robert Slaughter]

How do you get a cost segregation done?

[nanosuna1977]

I am working with a company that specializes in doing those type of analysis.  Just Google cost segregation study in your area and you will find companies that do so.  Hope this helps

[nanosuna1977]

Thanks, do you know if bonus appreciation can be done using TurboTax? I'm using the online version.  

[ColeenD3]

Yes, you can take bonus depreciation in TurboTax.

Special depreciation allowance

The code provision permitting this deduction is § 168(k). So now, in year 2021, businesses may potentially receive a 100% deduction of the cost of “qualified business property”—after first applying any applicable §179 deduction

[nanosuna1977]

Thanks for your prompt replies Coleen.  Are there any differences in the version of Turbotax?  Im asking this since im pretty much done inputting all the info in the online version, but I still have to add the cost segregation to it.  Are there any differences in what I can do relating to bonus depreciation in the different versions i.e. online vs  desktop? I have older properties that will need a change in depreciation method (it will need form 3115) for example.

thanks again.