How to claim catch up depreciation on a property that has never been depreciated since purchase?

[brockenbrough]

Great info in this thread, but see on question that was not answered.

Given that a form 3115 is completed  and a section 481(a) adjustment has been calculated. For example, $40,000
Also, given that the hypothetical 40K is entered as an "Other" expense on line 19 of Schedule E (form 1040).

Should the $40k amount be deducted from the taxable income for the current tax year?
What if it exceeds the amount of rental income for that year?

In my current tax return, prepared in TurboTax, the rental income (1040:Schedule E:Line 26)is simply brought to "0".
The full amount of the catch-up depreciation is now "claimed" but will never be fully deducted from my income. 

Is this correct? 
Of so, then perhaps simply amending the 3 prior years of income would have been more productive 😕

[Mike9241]

Your loss has probably been limited by the passive activity loss rules. look at form 8582. such losses are carried forward until useable or allowed in the year you sell the property.

[brockenbrough]

OK. That makes sense from the instruction, I think.
@Mike9241 What does "carried forward" mean?
Does this mean that I can incrementally apply the "catch-up depreciation" as a loss to future tax returns?
Or possibly deduct it from the sale price of the property?

[Mike9241]

you take the 481 loss adjustment in the year you file the 3115 - no reason not to. that loss becomes part of the passive rental loss. when adjusted gross income exceeds $150K for a tax year the amount of the passive losses that can be deducted is limited. maybe even zero. the full amount of any disallowed loss is available in the following year but again subject to the passive loss rules. 

it is not deducted from the sales price of the property. the loss is allowed as an ordinary loss on Schedule E. 

however, as you may be aware. upon sale at a gain, some or all of the depreciation is recaptured as section 1250 gain 

[brockenbrough]

Hmm...
Thanks again @Mike9241 

So I sounds like I may never be able to have the missed depreciation from past years apply as an income deduction as long as my total income remains sufficiently high.
Is that correct?

If I am able to apply it as a loss in future tax returns, is that also managed under form 8582?

[DaveF1006]

No, the only way you can claim depreciation in past years is to amend your return(s) from previous years.. in this case, you can only amend within three years from the date you filed your original return or within two years from the date you paid the tax, whichever is later. 

You cannot declare this as a loss in future tax returns. just remember to deduct this year going forward.

@brockenbrough 

[Mike9241]

no. when you sell that suspended loss is released.