Rental Deductions Depreciation

[piper59]

Does anyone know why my tax attorney would stop taking depreciation on my Rental house?  In years 2003-2007 she divided the basis by 27.5 yrs. and deducted  for each of those years.  I did have a passive loss each of those years. The next year  2008 she did not take any depreciation from that year on?

[AmeliesUncle · Accepted solution]

Was it purely rental, or did you also use the home for personal use?

Assuming it was 100% rental, it sounds like a mistake.  You should ask the person who prepared your tax returns.  You may need to seek professional help to correct things.

As a side note, why were you going to a tax attorney for your tax returns?  Unless you are going to court for tax reasons, you generally don't need a tax attorney.

[Critter-3 · Accepted solution]

And you are just noticing this 12 years after the fact ???  The depreciation should be on the Sch E each and every tax year until it is fully depreciated or taken out of service/sold.  

Sounds like an error that was perpetuated every year since then ... did you ask them why ?   If this is an error on their part then they should make the corrections for you gratis. 

[Anonymous]

@AmeliesUncle  There are many reasons some taxpayers use a tax attorney.  for example bookies and loan sharks.  A Non-attorney including a CPA can have their client's tax records subpoena but not attornies. 

[AmeliesUncle]

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@Anonymous wrote:

A Non-attorney including a CPA can have their client's tax records subpoena but not attornies. 

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Interesting.  I didn't think of that, but that makes sense.

I guess the 'dark' side of things like that don't occur to me.   🙂

[Carl]

In years 2003-2007 she divided the basis by 27.5 yrs. and deducted for each of those years.

Really? That makes me question the credentials of your tax attorney. That is "NOT" the correct way to figure depreciation, by any stretch of the imagination. I suspect you are just assuming that's how your attorney figured the depreciation. Just be aware that most likely, your assumptions are wrong.

The correct way to figure depreciation for residential rental real estate is detailed in IRS Publication 946 at https://www.irs.gov/pub/irs-pdf/p946.pdf using the worksheet on page 36, and the table A-6 on page 72.

The next year 2008 she did not take any depreciation from that year on?

The only valid reason for that, would be if you converted the property back to personal use on or before Jan 1, 2008 and no longer rented the property out from that date up to the present. So did you stop renting the property on or before Jan 1, 2008 and have never, ever, ever rented it out since that date?

[piper59]

Hi, I hope this gets to all of you who so kindly responded to my question. Thank you! I had no idea i would get a response that is why this is so late. So I started using this person because I listened to their radio program, they were well respected and we had just bought another home and were going to keep the first home to rent out.  I thought their price was reasonable and i kept decent records but didn't understand the depreciation part of rental.  The first 5 years  they did the depreciation on the home itself and some appliances i replaced, using the correct  forms  The  6th year which was in 2008 shows no depreciation on SchE1040, no 4562 Dep and Amor, no dep and amor report  E-2, or Alter minim tax dep. report, which they all did in 2007.  I expected this person to be accurate in what was allowable but never looked closely until this year when trying to do my 2017 taxes by myself with Turbo.  I have no idea what to do.  I am kind of freaked to approach this person.  Any suggestions would help me.  i need to file 2017,2018, and 2019.  I am not good at this stuff but i always keep my receipts but don't know the proper way to keep them organized.   We have had 2 cancer diagnosis in our family in the past 4 years and i find that taking care of others has left me putting off what i should have done for my own well being, if any of you wonder why i have procrastinated.  I am going to sell this house this year if possible or next year, its too stressful on us.  And now i just learned that the IRS will charge me the recapture whether i took it or not.  Since this is a pretty big mistake, how could a Tax Atty not know they are not taking depreciation for the home itself ????  

[Scorpion1 · Accepted solution]

Sorry to hear about your family situation, contact a Tax Accountant this time and he/she will assist you better. Hope you get out of this mess soon.

[piper59]

Thank you for your help and kind words.