How can I also split the depreciation on my rental property in half since I am 50% owner. This is straight forward in calculating expense and rental income but not when calculating depreciation.
You are correct in your observations. For depreciation, you will have to manually enter an amount based upon the percentage of your ownership. Program does not calculate nor splits the basis for you. Since you are splitting 50/50, you would enter half of the total amounts for building and land respectively. The reason why depreciation is "designed" differently, is because you can only take the depreciation on the portion of the property that you actually paid for, so taxpayers must have that data entry done manually.
In Turbo Tax, while entering rental information with partial ownership, only income and expenses can be entered in two ways, where you enter just your share or all income/expenses and let TurboTax allocate your percentage accordingly.
You are correct in your observations. For depreciation, you will have to manually enter an amount based upon the percentage of your ownership. Program does not calculate nor splits the basis for you. Since you are splitting 50/50, you would enter half of the total amounts for building and land respectively. The reason why depreciation is "designed" differently, is because you can only take the depreciation on the portion of the property that you actually paid for, so taxpayers must have that data entry done manually.
In Turbo Tax, while entering rental information with partial ownership, only income and expenses can be entered in two ways, where you enter just your share or all income/expenses and let TurboTax allocate your percentage accordingly.
When you split the depreciation, if it is under $2500, the system allows you to take a section 179 expense which means you can expense it in the current year or the following year. Is this allowable to do with multiple assets, say 4 purchases over $2500 ( 2900, 4100, 4100, 4800) split by 3 ( in my case there are three owners)? Seems like it would be a red flag!
@cndy_orth You can only take the 179 Deduction in the year that you placed the asset in service, so you would only be able to use this deduction once.
Next year, you would need to use the Rental Property Depreciation of 27.5 years.
You might also incur Depreciation Recapture later, and confuse the IRS.
Better to start off using the correct method of depreciation for Rental Property.
Click this link for more info on Section 179 Deduction.
This link has details on Rental Property Depreciation.
Marilyn,
According to Turbo tax, if you spread the asset over 5 years, as in a balcony repair ( my portion is $1400), the system allows you to do this. If you use section 179, better to take the whole amount as a write off, in my case the amount is $985.
So your answer confuses me.
Thank you,
Cindy