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Rental property- used wrong depreciation table

Rental property - Erroneously selected 10 year depreciation table instead of 27.5 years for 2017, 2018, 2019, and 2020. How do I fix this issue?

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3 Replies
DianeW777
Employee Tax Expert

Rental property- used wrong depreciation table

It depends. You can use a method the IRS approves to correct the depreciation and then add the difference to your income. 

 

Amending returns prior to 2022, will not fix the problem since those are closed years. As long as the rental property is in your tax returns correctly now, and since 2021, you can use the Form 3115 to make the correction in this current tax year. 

 

Calculate all of the depreciation you used before 2021, then use the chart below (also in IRS Publication 946) to calculate what it should have been.

 

Next, for the prior depreciation you have used in excess.  

  • You can use the following form to correct the depreciation for your rental property. Take any amount expensed in excess of the amount allowed on prior returns, as income on the current year tax return as 'Other Income'.

Form 3115 Instruction: By including this with the current year tax return, you can complete everything on the 2024 tax return.

  • Adopt a change in accounting method: This option allows you to go back as far as you need. Make the adjustment on your current year tax return to expense the missing depreciation.
    • Why am I adopting a change in accounting method? Claiming excess depreciation in two or more years indicates that you've chosen an accounting method with the wrong depreciation chart. In this case, you must now elect to change your accounting method to correct the depreciation.
  • This form is available in both TurboTax Online and TurboTax Desktop. TurboTax doesn't help you with this form. And your return must be mailed because this form is not supported through e-file.
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Rental property- used wrong depreciation table

Hi DianeW777, and thank you for your quick reply and expert advise. 

 

You had mentioned a chart I should use but I didn't see a link to a chart.  "Calculate all of the depreciation you used before 2021, then use the chart below (also in IRS Publication 946) to calculate what it should have been". 

 

I didn't include the rental property income for years 2021, 2022, 2023 due to I mistakenly make the assumption that because the properties were in Puerto Rico I didn't have to report them in the federal tax.   I can go and fix 2022, and 2023 but I'm not sure what to do with 2021.  Should I submit the 3115 with the 2022 tax amendment?  What happens to 2021?

 

Thanks!

Rental property- used wrong depreciation table

The 3115 goes with your current year tax return (2024).

 

I recommend going to a tax professional for this year.

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