I own my 2-family home. I use half as a business, as a (legal) Bed and Breakfast. Can I take commercial real estate depreciation?

[robertafelice]

When I rented out the apartment, I think turbotax prompted me to list real estate depreciation, but not now that I run it as a business.

[SweetieJean]

See your Q&A from 2 yrs ago:
<a rel="nofollow" target="_blank" href="https://ttlc.intuit.com/questions/2584684-i-operate-a-bed-and-breakfast-guests-have-use-of-a-full-ap...>

[TaxGuyBill]

Yes you can.  When you are in the Business section to enter the Schedule C Business, enter the home as an "asset", and enter the business-portion of the home (don't include any shared areas).

When entering that, you need to be sure to include the proper basis, taking into account the previous deprecation.

Was it changed directly from a rental to a Bed-and-Breakfast business?

[robertafelice]

Thank you so much! Yes, we stopped renting it, got our license for a BnB, and started BnB'ing Feb 13th, 2014. Looks like I have to amend!

[robertafelice]

Found where to enter half the house as an asset. Thank you!

[robertafelice]

I've corrected the Schedule C, but when I download the forms, the changes don't show up. TT seems to be impossibly amendment-unfriendly.

[TaxGuyBill]

So the depreciation is not showing up on Line 13 of Schedule C?

[robertafelice]

You're right - the total value of assets is correct, but in the breakout of items (Form 4562 Depreciation and Amortization Report), the house isn't listed.

[TaxGuyBill]

Form 4562 only lists assets that are "placed in service" during the CURRENT year.  If you entered the "placed in service" date as the date you started the rental, they will not show up in Part 3 of Form 4562.

[TaxGuyBill]

But they should show up on the "Depreciation and Amortization" WORKSHEET.

[robertafelice]

Ugh. The worksheet is nowhere to be found. I plan to print out a new schedule C and do it by hand.

[TaxGuyBill]

If the amount is showing up on Line 13, there isn't a need to manually do anything, it is already correct.

If you print (or make a PDF) of ALL worksheets, the "Depreciation and Amortization Worksheet" should be there.  However, that is only for your reference; it is not filed with your amend tax return.

[TaxGuyBill · Accepted solution]

Because you changed it directly from a rental to a Business, use the original "placed in service" date when you first used it as a rental.  Then enter the proper Basis and "prior depreciation" from the rental.  Do the same thing for any any other "assets" (furnace, roof, furniture, etc.),