depreciation calculation for vacation rental with varying personal use each year seems incorrect

[jbairdmn]

How do I get Turbotax to calculate the correct depreciation for my vacation rental property that has a different business use percentage each year? It seems to be doing it incorrectly. For example, if my total depreciable cost basis for the condo itself was $200,000, I would divide $200,000 by 27.5 years to get the annual depreciation allowed for 100% business use, then multiply that by the business use percentage in the current year to get the allowable deduction for this year. What Turbotax is doing instead is taking the $200,000 x the current year business use percentage and saying that is my depreciable basis, so if I used it for business 30% of the time this year, it is telling me my depreciable basis is $60,000.  Prior depreciation taken is over $60,000, so it is saying I get $0 depreciation deduction for this year.  I think I should get a $2181 deduction ($200,000/27.5 x 30%).  The way TT is doing it would make sense if I was renting 30% of my property each year, but not for my situation in which I am renting 100% of the property, but for different percentages of time each year. Any suggestions on how to fix this? The problem seems the same in Deluxe and Premier editions.

[RobertB4444]

You are doing the depreciation incorrectly, and TurboTax is doing it correctly.  It is calculated from business use percentage for the year, it is not straight line depreciation.

@jbairdmn 

[jbairdmn]

I'm sorry, I must have been unclear with my example. I know it is based on the percentage of business use in the current year, which is exactly my point. If I have a 5 year MACRS asset that is in year 3 of its depreciation, and I used the asset 35% for business (based on days rented vs personal use), then shouldn't I be able to deduct 35% of the third year's depreciation? TT is calculating $0 depreciation for the year.

[ThomasM125]

You would have to delete the asset and re-enter it and state that you didn't have any prior depreciation. That way you will get the correct depreciation for the current year. However, you will need to keep track of the depreciation taken over the years so that you can enter the correct accumulated depreciation when you dispose of the property. Also, you need to keep track of how many years you are depreciating the property, as TurboTax will assume the wrong year for the depreciation since you are indicating that it wasn't depreciated in prior year when it was.

This will only work for the house, since it gets straight line deprciation. It may not work for furniture and equipment, since you use accelerated depreciation for that, so the depreciation amount will differ from year to year.

@jbairdmn 

{Edited 3/12/23 at 6:23 AM PST}