topic 2025 TurboTax Business calculating property depreciation over 26.5 years instead of 27.5 in Investors & landlords

2025 TurboTax Business calculating property depreciation over 26.5 years instead of 27.5

_John__ — Sun, 23 Nov 2025 12:30:49 GMT

Updating question to note fiscal year:

Starting my 2025 LLC tax preparation and TurboTax Business is mis-calculating my rental's deprecations (unless someone can correct me here):

Asset Information:

Description: House

Purchase Date: 8/1/24

First-year expense decution: zero

Original amount to be depreciated when placed in service (excluding land): $705,930

Business use: 100%

Depreciation method: SL/MM

Fiscal year: ends 11/30

TurboTax calculation: 2025 deduction of $26,650, which is within a few dollars of depreciating over 26.5 years ($705,930 / 26.5). TurboTax is projecting the same amount for 2026.

2024 taxes had the same cost basis and depreciation method ($7,487 for 3.5 months: mid Aug-Nov). I have been using straight-line depreciation for the same amount coming up with $25,670 ($705,930 / 27.5) for 2025. Am I off here or how do I correct/override?

A better way of calc'ing the full year 2025 depreciation gets me to the same answer: ($705,930 - $7,487) / (27.5 * 12 - 3.5) * 12 = $25,670

Re: 2025 TurboTax Business calculating property depreciation over 26.5 years instead of 27.5

M-MTax — Sat, 22 Nov 2025 16:05:35 GMT

Did you place this property into service in August of 2024?

If so, then that would be 4.5 months, not 3.5 months. Do the math using that figure.

Re: 2025 TurboTax Business calculating property depreciation over 26.5 years instead of 27.5

AmeliesUncle — Sat, 22 Nov 2025 21:50:00 GMT

If you go through the questions again, is there any chance you entered the wrong year or the wrong "prior depreciation?

Another possibility is that the current 2025 program is essentially still the 2024 program, which could cause errors (which could possibly explain why it is using 26.5 years). If I double checked that the information I entered was correct, I wouldn't give the wrong amount another thought until the mid-January update.

Re: 2025 TurboTax Business calculating property depreciation over 26.5 years instead of 27.5

M-MTax — Sat, 22 Nov 2025 23:55:47 GMT

@AmeliesUncle

The wrong date (or time period) was used for 2024 depreciation. @_John__ stated that $7,487 was the depreciation deduction for 2024 for an asset that was placed in service in August. The correct figure should be $9626 and that will affect deductions going forward.

Re: 2025 TurboTax Business calculating property depreciation over 26.5 years instead of 27.5

AmeliesUncle — Sun, 23 Nov 2025 00:31:08 GMT

@M-MTax wrote:
@AmeliesUncle

The wrong date (or time period) was used for 2024 depreciation. @_John__ stated that $7,487 was the depreciation deduction for 2024 for an asset that was placed in service in August. The correct figure should be $9626 and that will affect deductions going forward.

Even if it was placed in service in August (although he said 3.5 months, which could mean it was placed in service in September), the less-than $2200 difference in the first year shouldn't account for the $1000-ish difference in depreciation for the following year.

I agree with you that an incorrect "prior depreciation" would incorrectly alter the current and future year depreciation, but the specific numbers in this case still would not make sense. While your comment could be a factor, I think there is more to it than only that.

Re: 2025 TurboTax Business calculating property depreciation over 26.5 years instead of 27.5

M-MTax — Sun, 23 Nov 2025 01:27:49 GMT

@AmeliesUncle wrote:
While your comment could be a factor, I think there is more to it than only that.

I understand, but then you and I (I believe) are aware of how TurboTax can wildly mess up the figures based on past input. For example, I recall a test return I did where the current year deduction would be way off and variable every single time past depreciation was changed. Crazy stuff.

Re: 2025 TurboTax Business calculating property depreciation over 26.5 years instead of 27.5

_John__ — Sun, 23 Nov 2025 12:19:05 GMT

@M-MTax @AmeliesUncle

Good catch that I left out an important detail for 2024 that my fiscal year ends with November as opposed the the typical calendar year. That's how 2024 came in with 3.5 months of depreciation.

I'm working on 2025 now (again, because the fiscal year ends earlier.) It's in the 2025 version of business tax that I'm not getting the correct depreciation. Thank you

Re: 2025 TurboTax Business calculating property depreciation over 26.5 years instead of 27.5

_John__ — Sun, 23 Nov 2025 12:14:12 GMT

Yes, I triple checked the information and agree that waiting for an update will be helpful.

Re: 2025 TurboTax Business calculating property depreciation over 26.5 years instead of 27.5

M-MTax — Sun, 23 Nov 2025 17:17:41 GMT

@_John__

Perhaps a dumb question, but are you certain you chose your (correct) fiscal year and not a calendar year? I'm not sure but I believe the program defaults to the latter.

Also, can you go into Forms View and look at your Asset Entry Worksheet (or whatever it is called in TT Business)? The recovery period should appear on that form or one similar to it.

Re: 2025 TurboTax Business calculating property depreciation over 26.5 years instead of 27.5

VolvoGirl — Sun, 23 Nov 2025 17:49:22 GMT

@M-MTax Isn’t there something about using the prior year program to file a return that has a different fiscal year end? So they need to use the 2024 program to file for Nov 30? Or is that only for short years or 1041 Trust returns?

Re: 2025 TurboTax Business calculating property depreciation over 26.5 years instead of 27.5

M-MTax — Sun, 23 Nov 2025 18:33:13 GMT

You're correct, @VolvoGirl., and this is getting more intriguing since @_John__ 's LLC current fiscal year doesn't end until 11/30/2025 (that's next week and that return wouldn't be due until February).

The 2024 Form 1065 can be used for fiscal years that begin in 2024 and end in 2025, that part is clear. What is NOT clear is why @_John__ is using 2025 TurboTax Business to file a fiscal year 2026 1065 that won't be due until after November 30, 2026 (now thinking a mistake has been made).

If @_John__ is preparing a 2025 fiscal year 1065, the wrong product is being used (it should be the 2024 edition of TurboTax Business).

Re: 2025 TurboTax Business calculating property depreciation over 26.5 years instead of 27.5

VolvoGirl — Sun, 23 Nov 2025 18:45:47 GMT

Then depending on when he started the LLC he may have been filing every year the wrong way?

Re: 2025 TurboTax Business calculating property depreciation over 26.5 years instead of 27.5

M-MTax — Sun, 23 Nov 2025 19:16:56 GMT

@VolvoGirl wrote:
Then depending on when he started the LLC he may have been filing every year the wrong way?

I suppose we have no real way of knowing.

However, @_John__ wrote, "Starting my 2025 LLC tax preparation and TurboTax Business...". If, by that, @_John__ means he's starting his 2025 fiscal year return (i.e., the one due in February), he's using the wrong edition of TurboTax Business (should be using 2024 TT Business). If the return being currently prepared by @_John__ is for the 2026 fiscal year, that thing is way early as that 2026 fiscal year return isn't due until February of 2027.

Re: 2025 TurboTax Business calculating property depreciation over 26.5 years instead of 27.5

AmeliesUncle — Sun, 23 Nov 2025 20:48:04 GMT

And that isn't even going into asking if choosing a Fiscal Year was allowable for his situation or not ....

Re: 2025 TurboTax Business calculating property depreciation over 26.5 years instead of 27.5

M-MTax — Sun, 23 Nov 2025 21:17:18 GMT

@AmeliesUncle wrote:
And that isn't even going into asking if choosing a Fiscal Year was allowable for his situation or not ....

That's true and a good point. Also, perhaps asking if this, in fact, is a multi-member LLC.

Re: 2025 TurboTax Business calculating property depreciation over 26.5 years instead of 27.5

_John__ — Mon, 24 Nov 2025 12:36:10 GMT

@M-MTax @AmeliesUncle @VolvoGirl

What I thought was going to be a straightfoward question on depreciation has resulted in a lot of great questions for me and I really appreciate the dialogue!

The LLC is a multi-member LLC that was established in July 2024 and filed with a fiscal ending date of Nov 30 as that aligns with 1099s produced by my property management company that end on Nov 30. I appear to be fortunate that there are two members to the LLC in order to use the fiscal date, but I hope I'm not missing anything more on that issue.

I did file my taxes from 7/2024 - 11/2024 on the 2024 1065 as it was a short year.

As I am preparing my taxes for 11/24 - 11/25, I tried starting in TT Business 2024, but when I select a fiscal tax year, the furthest into 2025 that it goes is June. If I select the month of Novemeber, then it defaults the end date to 11/2024 without an option to change to 2025. If I start the return in TT Business 2025 with a Nov end date, it selects 11/2026 using the 2025 1065. My workaround to start is using TT 2024 and changing the start of the business to 2023 with a plan to override that later in the process. Better suggestions?

I haven't even gotten to the depreciation, but hopefully that uses 27.5 years.

Thank you!

Re: 2025 TurboTax Business calculating property depreciation over 26.5 years instead of 27.5

AmeliesUncle — Mon, 24 Nov 2025 22:53:46 GMT

@_John__ wrote:
fiscal ending date of Nov 30 as that aligns with 1099s produced by my property management company that end on Nov 30.

in order to use the fiscal date, but I hope I'm not missing anything more on that issue.

I did file my taxes from 7/2024 - 11/2024 on the 2024 1065 as it was a short year.

As I am preparing my taxes for 11/24 - 11/25, I tried starting in TT Business 2024, but when I select a fiscal tax year, the furthest into 2025 that it goes is June.

1099s are always filed on a calendar year. Are you SURE your management company is filing them on a fiscal year? If they are, they are doing it incorrectly.

Unless you can demonstrate a business purpose to a fiscal year, the required tax year is the same as the Partners.

If you have a fiscal year that begins in 2024, you use the 2024 software. Because you also filed a 2024 short year return, it is unlikely you can transfer last year's file into the current year file. If you did that, I suspect that is what is making the dates funky.

There are special calculations for short-year depreciation (you can't use the "tables" and can't just Basis divide by 27.5), and I'm not sure if TurboTax supports that. And I suspect that because of a short year, the depreciation will always be a bit funky due to not using the "tables" for depreciation.

In my opinion, it sounds like you need to go to a good tax professional to get things straightened out.

Re: 2025 TurboTax Business calculating property depreciation over 26.5 years instead of 27.5

_John__ — Tue, 25 Nov 2025 12:23:34 GMT

@AmeliesUncle

I'm 100% certain the 1099 from last year was on a fiscal basis, even if that is not correct. The 1099 excludes revenue earned in Dec 2024 and matches the short year leading up to it.

I appreciate the advice of a tax professional, but I'm the DIY type. I'd add that I have enough accounting credits to sit for the CPA, but that's stale and doesn't translate to unique situations.

My plan is to move to a calendar year basis, which would align with the members' personal filings:

Use the incorrect 1099 ending Nov 2025 to file a full fiscal year (2024 1065) ending Nov 2025 by 2/15/2026, producing K1s
File form 1128 with a short year of 12/1/2025 - 12/31/2025 (2025 1065) self-reporting revenue to move to a calendar year, producing K1s
File personal taxes on calendar year including two K1s for the above
For 2026, file 1065 adjusting the 1099 to remove Dec of the prior calendar year and adding Dec of the current calendar year

As far as the depreciation goes, I'll continue to use the / 27.5 years / 12 months * # of months for a straight-line mid-month methodology and if TT doesn't calculate correctly, I will override.

Thank you for all the advice!

Re: 2025 TurboTax Business calculating property depreciation over 26.5 years instead of 27.5

M-MTax — Tue, 25 Nov 2025 15:55:20 GMT

@_John__ wrote:
I'm 100% certain the 1099 from last year was on a fiscal basis, even if that is not correct. The 1099 excludes revenue earned in Dec 2024 and matches the short year leading up to it.

The IRS requires 1099s to be issued on a calendar year basis and include revenue that is actually paid (and that's regardless of whether the taxpayer is an accrual or cash-basis taxpayer).

Thus, is it possible that the revenue earned in December was not paid until the following year (January)? That would make your 1099 correct,

Re: 2025 TurboTax Business calculating property depreciation over 26.5 years instead of 27.5

_John__ — Tue, 25 Nov 2025 19:45:20 GMT

@M-MTax Yes, you're spot on. The 1099 is on a cash basis rather than an accrual basis. I would rather do the books based on accruals, but the IRS doesn't care what I think. As I switch from fiscal year to calendar year, I'll also switch from accrual to cash. Again, thank you for the thought provoking questions and hypotheses!