Rental property basis discrepancy with prior CPA -severely undervalued for depreciation

[1isa]

Home purchase price $330,534

Prior (now retired) CPA had cost/basis at $99,504

1) Should I carry over exact same entry from CPA, or follow TurboTax prompts and enter actual price?

2) If I enter purchase price, should I declare prior CPAs prior depreciation (which is substantially less than what TurboTax assumes has already been depreciated) or disregard prior numbers altogether and simply follow the software prompts?

3) Any red flags by not staying consistent with prior filings?

The home was purchased as a rental.  No foreseeable future to sell as a rental.  Will reclaim as primary residence or be inherited should owner pass on.  Therefore, tax recapture should be irrelevant, correct?

[ColeenD3]

You can't just make changes to the depreciation. You'll need to file Form 3115 to correct the past errors. Depreciation recapture is not irrelevant. Even if you convert it to personal use and exclude the gain, you still have to recapture the depreciation.

One solution is to elect an accounting method change and file a Form 3115 in the current year and take the  prior depreciation as a section 481(a) adjustment. [land  value is separated, land is not depreciated]

Below are the IRS links related to the change in accounting method. TurboTax does not have that form.

May be these will help

Form 3115, Application for Change in Accounting Method

Change-in-Accounting-Method

Instructions for Form 3115 (03/2012) 

Instructions

Form 3115,

Form 3115

[1isa]

Does it make sense to speculate that prior CPA used a conservative figure to balance future recapture? Having a hard time wrapping my head around the massive discrepancy. 

[DianeW777]

Sometimes a different method is chosen versus the normal or general method of depreciation.  It's important to review all of your prior tax returns to see what method your CPA had chosen for your rental property.  Also make sure you aren't looking at the land value versus the rental house cost basis  itself because it would have been separated out.  Land is always appreciable so for this reason it can never be depreciated.

• General Depreciation System (GDS) would be 27.5 year recovery (life) 
• Alternative Depreciation System (ADS) recovery period was changed from 40 years to 30 years for residential rental property placed in service after Dec. 31, 2017, but remained 40 years for property placed in service before Jan. 1, 2018.
  • IRS Publication 946 (the tables can be found towards the end)

As our awesome Tax Expert @ColeenD3 pointed out you are not allowed under tax law to change your depreciation or asset without permission by filing Form 3115. Once this form is filed with the tax return you can deduct any and all depreciation that was previously unused, if that is the case.

Form 3115 Instruction: By including this with the current year tax return, you can complete everything on the 2021 tax return.

1. Adopt a change in accounting method: This option allows you to go back as far as you need. Make the adjustment on your current year tax return to expense the missing depreciation.
   • Why am I adopting a change in accounting method? Not claiming depreciation in two or more years indicates that you've chosen an accounting method without depreciation. In this case, you must now elect to change your accounting method to include depreciation.
2. You must use the TurboTax CD/Download version to complete this form. TurboTax does not help you with this form. And your return must be mailed because this form is not supported through e-file.

This must be completed and filed with the return on time.

You can change to TurboTax CD/Download if you choose.

• How to switch from TurboTax Online to TurboTax CD/Download?