Do I need to do the amendment

[mmjuns]

Hi,

I have reported my rental property in China for the past three years. For this year, Tubor Tax has a new option to ask me if the property is outside of the US or US possessions. I think it should be YES. When I chose this, Turbo Tax told me I need to do an amendment for my previous year tax return (I think I should do for 2022 and 2023) because the depreciation method is different. But I found the depreciation actually remains the same no matter if I chose YES or NO. The same happens for 2023. 

I just wanna know if I need to file an amendment for my previous years tax return for this even the result is the same.

[Mike9241]

foreign residential property uses a 30-year life, commercial 40.

so if that's what you've been using then no amendment is needed. 

[mmjuns]

Hi, 

Thank you for the reply! 

I checked the 1040 form and I found the depreciation expense or depletion filed for this property is 0. 

I used Turbo tax to calculate the depreciation so I don't know what forumla it used. But no matter if I picked the property is outside of US or not, this field is always 0. 

Do you think I should file the amendment or where I can find the forumla in the tax return form?

Thank you in advance!

[mmjuns]

BTW, I went through the tax return forms and I didn't find anywhere to select if the property is outside or inside of US (the address I listed is already proven it's outside of US). So that option is only used to calculate the deprecation right? If the result is always 0, does it mean I don't need to make the amendment?

[SusanY1]

If the depreciation showing in prior years is $0 it sounds like you likely should amend the returns to show the correct amount of depreciation.  You will need to set the rental home up in Turbotax as an "asset" for it to properly calculate depreciation.  

The property, since it is overseas, should be depreciated over a period of 29 years.   

When the property is sold, you will be responsible for recapturing the depreciation allowed or allowable so you should benefit from it in the years where you can. 

If you have been reporting this for longer than it is reasonable to amend, you can also try adjusting for it in this tax year using the "change in accounting method" form.  To learn more about that option see THIS thread.