Depreciation rental property

[xat4562]

For last 2 yrs I have used Schedule E to report my rental property. Line item 18 ask for "Depreciation expenses" which I have never used but initialed. I have read most of all explanations offered by IRS TAX. It looks like I need to fill out form 4562 but not sure. If I am to do it then I need help in doing it correctly. HELP  I have been  doing my taxes for 50 yrs and this is my first time to ask for help.

[PatriciaV · Accepted solution]

Yes, TurboTax will complete Form 4562 for you when you add your rental property under Rental Properties & Royalties for Schedule E, found in the Wages & Income section.

The easiest way to find Schedule E in TurboTax is to use the Search box at the top right side of the TurboTax header. Enter "schedule e", hit Enter, then click "jump to schedule e". This will take you directly to the start of this section.

Or go to My Account >> Tools >> Topic Search. Type in "schedule e", then click the topic in the list.

Follow the prompts to set up your rental property, report your income & expenses, and add your property under the Assets/Depreciation section. When you complete your entries, Schedule E will be prepared, including Depreciation Expense on Line 18.

These posts may be helpful as you work through this topic in TurboTax:

• Where do I enter income and expenses from a rental property?
• What kinds of rental property expenses can I deduct?
• How do I add my Rental Assets?
• How do I handle capital improvements and depreciation for my rental?

Tip: Do not attempt to complete Form 4562 on your own. The rules for depreciation are complex, which is why we recommend using the process described above.

[sharoneicher]

I use TurboTax and have a rental property which I have included in my tax returns for several years.  To my knowledge, I have never been prompted to include depreciation.  

With depreciation, our property generates no net income, so I need to resolve this.  What am I doing wrong, if I do not get prompts for depreciation?

[rschumert]

My question is can I choose not to "claim" depreciation expense on my rental property expenses on Schedule E?

[Vanessa A]

Not really.  Whether or not you claim the depreciation expense, when you dispose of the property you will be required to recapture the depreciation you were allowed to take.  This means, if you are allowed to take depreciation of $10,000 this year and each of the next 5 years but didn't, and you sold in year 6, you would have to recapture $60,000 in depreciation.  You would then have to pay taxes on that $60,000 a second time since you didn't take it when the IRS said you should. 

[rschumert]

Thanks Vanessa, that it makes it very clear that we need to take depreciation on the property each year.

[rschumert]

Thanks Vanessa, that it makes it very clear that we need to take depreciation on the property each year.