TT not applying 30 year depreciation method for foreign rental property (2024 filing)

[abejls]

I have a foreign property put up for rental in 2024 and despite indicating it is a non-US property and indicating another country in the address of the rental property, TT still depreciates this at 27.5 years. In the Form 4562 generated, it puts it in Part III 19h (27.5 year schedule for rental property) instead of Section C 20h (Alternative 30 year Depreciation System).  I cannot find anywhere to edit the depreciation method to ADS. It seems like it would force me to submit this using a US based property depreciation schedule. This seems like a significant bug with TT. Any way to remedy this before I submit for filing?

[DianeW777]

Yes, there is a remedy. TurboTax does know the correct calculation however there is a question that may have been missed in your entry of the property. When you are entering the address there is a check box 'Foreign Country' that must be selected. Once this happens, the 30 year ADS depreciation will kick in for you.

To enter your rental:

1. Open or continue your return.
2. Navigate to the rentals section:
   • TurboTax Online/Mobile: Go to rentals.
   • TurboTax Desktop: Search for rentals and select the Jump to link.
3. Answer Yes to the question Did you have any income from rentals or royalties?
4. On the next screen, Let's see if you're a real estate professional, select any options that apply to you.
5. On the screen What are you here to report?, select Rental property and Continue.

[abejls]

@DianeW777 what you mentioned and showed in your screenshot is exactly what I did, but TT still uses the 27.5 year depreciation schedule. I even tried test entries specifying 'Foreign Address' and selecting different countries and get the same 27.5 year depreciation schedule.  Someone I know who has foreign rental property is also getting the same thing. I think TT hasn't QA tested this piece sufficiently.

[DianeW777]

It has been tested by me before and I appreciate you bringing this back to us. If you would like to send us a “diagnostic” file that has your “numbers” but not your personal information it would help.  If you would like to do this, here are the instructions:  (Don't forget to give us the state)

TurboTax Online:

Open your return -Go to the menu panel on the left side of your return and select Tax Tools. 

1. Then select Tools below Tax Tools.
2. A window will pop up which says Tools Center.  
3. On this screen, select Share my file with Agent.
4. You will see a message explaining what the diagnostic copy is.  Click okay through this screen and then you will get a Token number.
5. Reply to this thread with your Token number and your state. This will allow us to open a copy of your return without seeing any personal information.

TurboTax Desktop:

If you like, you can send a copy of your return that will be scrubbed to eliminate your personal data by using these steps:

1. Click on Online in the top left menu of TurboTax Desktop for Windows
2. Select 'Send Tax File to Agent'* > Follow the prompts to reach the token number.
   • Enter your email used for TurboTax > Enter your code > Send
3. Write down or send an image of your token number and state then place in this issue.
4. We can then review your exact scenario for a solution.
5. Please also tell us any states included in the return. This is necessary for us to view the return.
   • *If using a MAC, go to the menu at the top of the screen, select Help, then, 'Send Tax File to Agent')

We will be able to see exactly what you are seeing and we can determine what exactly is going on in your return to provide you with a resolution.

[abejls]

Thanks for this @DianeW777 , my token number is 1302880. State is CA. Will wait for your feedback before filing.

[DianeW777]

Thank you for sending your information. Do you own any land with this rental because it's important to enter that in the software when asked. Land is always an appreciable asset and has much better consequences when sold.

The key is the screen titled 'is Your Property in Any of These Designated Areas?' This is a follow up while entering the asset. Once you select the following you will come to the screen that show it is using 30 year depreciation.

• Assets for this property are located outside the US or US Possessions.
• All of the assets for this property are located outside of the US or US Possessions.
  • See the screen images below.

[abejls]

@DianeW777 this is a condominium unit, so there is no land value, only the price of the unit/improvement itself. 

I also don't get prompted with the screens you showed for Designated Areas. The section you mentioned 'is Your Property in Any of These Designated Areas?' didn't appear for me and the other co-owners for this property when we started the entry of this rental asset. Even when I created a test entry to verify the depreciation schedule, I did not get this screen. Is there a way to get to it at this point for me?

[DianeW777 · Accepted solution]

Perhaps it may be the screen for TurboTax Online that follows one of the ones above. In the Rental Property Info Section, select 'Edit' under the section 'Reservation, disaster, or outside US area' then you will see the screens below similar to the ones posted earlier.

Next go through your condo asset and you will see a 30 year recovery as indicated below. This should take you to the correct finish.

@abejls 

[abejls]

Thank you @DianeW777 , that was the missing step and fixed the issue with the correct 30 yr depreciation.

I was assuming selecting the first screen's "Foreign Country" option would trigger this non-US workflow and 30 year depreciation method, but I see now that only when selecting the 2nd set of screens you pointed out does the logic actually kick in (the initial 'Indian reservation' and 'disaster area' text made me skip over the rest of the selection).

MANY THANKS for your valuable help and expertise with this. It's helping 2 other TT users I'm working with! I appreciate the time you spent to investigate this.