In the past 28 years, I have been using straight line 39 years mm depreciation method for my rental property with turbo deluxe, this year it gives me a 40 years depreciation method, how can I change it back to 39 years to be consistent with the past?

Forum|Forum|5 years ago
March 15, 2021
7 replies
57 views

No text available

ColeenD3

Level 15

In the depreciation section, do not select Rental Real Estate Property, choose Intangibles, other property. Next, choose other asset type. Enter the information in the next two screens and When you get to the Asset Class Screen, in the drop down box, choose 39 years.

IZZEAuthor

Level 2

Hello! All my assets and information are automatically transferred and imported from 2019 return by Turbo Tax,

this rental property has been depreciated using 39 years method since the day it was placed in service in 1993, do you suggest that I change the classification of the property to "intangibles other property" in order to be able to modify the depreciation method? It sounds more complicated and I don't think I know exactly how to follow your idea!

Carl

Level 11

I assume this is foreign residential rental real estate. Is my assumption correct?

Note that you can not just arbitrarily go changing the depreciation period, as doing so will completely skew your depreciation history. It also does not change on it's own (unless there's one heck of a glitch somewhere) You need to look at the printout of the IRS Form 4562 for both 2019 and 2020, that prints in landscape format, with the title at the top that reads "Depreciation and Amortization report". Look in the "life" column and confirm beyond any doubt, (for that specific asset) that it's the same (or not) on the 4562 for 2019 and 2020.

The property would only be 40 years if it's entered as an asset on the SCH C. So I'm wondering if something happened to import it to SCH C. Or maybe you do "in fact" have a SCH C business with Business Real Estate on it?

IZZEAuthor

Level 2

I have been using Turbo Tax Deluxe in the past for all my returns, this year the system automatically change my depreciation method from 39 years to 40 years, it's the same property located in the U.S., not foreign property, and I never had Schedule C in any of my returns. If this change doesn't cause any problem with IRS, it will be fine with me, do you think IRS will reject this change?

Carl

Level 11

The only type of rental property located in the U.S. that's reported on SCH E that would be depreciated for any period of time "other" than 27.5 years, is commercial rental real estate? Is that what you have here?

do you think IRS will reject this change?

The question is not if they will reject it. The question is, will they audit you on it?

My answer to that is, It's possible. Might even consider it "highly probable". But what you 'really' need to check, is that the prior years depreciation already taken, is correct.

Take a look at the 2019 IRS Form 4562 for this property. It prints in landscape format and is titled "Depreciation and AMortization Report". On that form add together the amounts in the Prior depr column and the current depr column. Does that total match the prior year's depreciation shown on the details page in the 2020 program for that specific asset? (I am expecting it does not match, and if so we need to take manual action to fix this.)