The Depreciation worksheet in Turbo Tax does not match my accountants rental depreciation schedule

[DavidS127]

When the depreciation schedules from two different software programs do not match (off by more than a few dollars), it means the information was not entered identically into the two software programs.  For example, different date used for "acquired" or "disposed", different cost of asset, different depreciation life or convention.

Look for the differences between the two on the depreciation report to diagnose the issue.

[Carl]

Depreciation for the actual rental property itself? Or some other rental asset?It's one of two things.

 1) Your accountant has not been correctly depreciating the assets.

 2) YOu entered the wrong number for "prior depreciation already taken" in the program.

Number two is most likely. So lets look at the IRS Form 4562 from your 2018 tax return. There are two 4562's for that rental property and they both print in landscape format. You want the one titled "Depreciation & Amortization Report" and not the one for AMT depreciation. We'll use that form to confirm you entered the correct numbers into the TurboTax program for your 2019 taxes.

In the program elect to edit/update the rental property asset.

On the Review Information screen,

Description should match exactly what is in the Asset Decription column of the 2018 form 4562.

Date: should match the Date In Service on the 4562.

Asset Type: Should be I-Residental Rental Real Estate (the letter "eye", not "el")

COST: your cost basis in this asset. TO get the correct cost basis, look at the 2018 form 4562 and add together the amounts in the Cost (Net of Land) and the Land column. The total is your cost basis in this asset and is the amount you enter in the COST box in the program.

LAND: enter the amount shown in the "Land" column on the 4562 for this asset.

Prior Deprec: The total of all prior year's depreciation already taken on this property. To get the correct figure look at the 2018 form 4562. Add together the amounts in the Prior Depreciation and Current Depreciation columns for that asset. That total is what you enter in the Prior Deprec box in the program.

For Business % I am assuming this property was classified as residental rental real eastate for every single day of 2019.  So enter 100% and click continue.

For "Did you stop using this asset in 2019?" I assume you did not. So click NO.

Now on the summary screen you can click Show Details and everything should match up. Your 2019 depreciation amount should be spot on the same as last year for this specific asset. If it's off by a buck or two, that's fine. Since the IRS rounds to the nearest dollar, that's the way the program works. So for example, if you have $2182.00 deprecation on your 2018 return and $2183.00 on the 2019 return, you're perfectly fine.

[Anonymous]

Hi Carl/all,

I'll provide some context. I purchased this house in 1988 and I did not turn it into a rental until 2007. My Accountant documents the "Acquisition" date as 1/15/2007. The Cost basis for the building is $146,775. I have a capital improvement competed on 11/27/13 in the amount of $6,000. The cost basis for the land is $105,415.

It appears it has been depreciated over two different time periods. 27.5 years for the house and 20 years for the capital improvement.

For 2018, the house was depreciated $5,338 at a rate of .03637 and the capital improvement was depreciated $326 at a rate of .05439.

That brings me to a total of $5,664 for 2018 and a total prior depreciated amount of $60,134. 

I cannot figure out how to enter this data in Turbo Tax and achieve the expected outcome of $5,664 for 2019. 

Thank you for your help so far.

Cheers!

Jack

[Carl]

My Accountant documents the "Acquisition" date as 1/15/2007.

Actually, that's the in-service date. At this point, the acquisition date is irrelevant and just doesn't matter *for* *your* specific* *purpose* *at* *this* *moment* *in* *time*. (Emphasis is for others reading this thread, because I have no doubt they'll want to throw in additional information which, while it will be correct, will not be relevant to *YOUR* specific situation.)

The Cost basis for the building is $146,775.

That's more accurately referred to as the depreciation basis. But I digress.

I have a capital improvement competed on 11/27/13 in the amount of $6,000.

What exactly is that property improvement? Fence maybe? Or something else? What is is made of? Wood? Concrete? Plastic? PVC? Something else? SOmething is screwy here, at least in my mind at the moment. So I need details to get myself out of what is most likely a self-created quagmire. 🙂

[Anonymous]

Hi Carl,

The capital improvement is a sewer line. All I want to do is use the Turbo Tax tool to generate the same amount of depreciation my accountant uses. I can't figure out how to accomplish that using the tool. 

I appreciate your feedback.

Jack

[Anonymous]

I appreciate all of the responses.

I figured out the issue for me. I made an error on the depreciation form.

Thanks!

Jack