Re: I was hoping I could fix it on my 2017 return. If I were...

ebbywhit · Jun 4, 2019 9:23:47 PM

<P>I sold my rental property in July. In preparation for filing my 2017 return, I noticed errors in depreciation claimed from 2012-2016. The rental was converted in 2007 and has a basis of $100,900. The correct amount of depreciation was claimed from 2007-2011 but I changed software in 2012 and the incorrect basis was inadvertently calculated. This has resulted in under claimed depreciation of $4,909 as well as under reported passive losses for the same amount. The losses would have been unallowable due to income but I want to be able to use in order to offset gain on sale. As of 2016 and as filed, I have $25,812 in prior year losses and the estimated gain realized using the correct (allowed depreciation) would be $28,460. Technically my losses should be $30,721 instead of $25,812. Can I correct this error so I will be able to use the $4,909 in losses not reported from 2012 to 2016 to offset any capital gains on the sale? Can I use form 3115 or is there a better way? </P>

How can I correct the amount of depreciation on a rental property after it was sold?

you've completely lost me on why you'd want to do this. I'll admit I'm new to this - just passed my EA exams last month and finishing up a Masters in Taxation - but increasing your depreciation will decrease your adjusted basis which will just increase your depreciation recapture at sale - which would be taxed at a higher rate than regular capital gains. Why would you want to do that? What am I missing ???