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martincjm1412
New Member

Why does TT calculate part year depreciation for real estate different from IRS rules? Shouldn't it be mid-month of month sold? TT calculates it based on prior month.

I sold rental real estate on 6/20/2017.  IRS indicates that depreciation for the year should be based on mid-month of month sold, so 6.5/12*annual depreciation.  TT is calculating it based on mid-month of the prior month, not the month sold, or 5.5/12*annual depreciation.  Why is this and is this correct?

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Accepted Solutions
DianeW
Expert Alumni

Why does TT calculate part year depreciation for real estate different from IRS rules? Shouldn't it be mid-month of month sold? TT calculates it based on prior month.

If the house was sold in June, then under the MACRS mid-month convention you get a half month for June and a whole month for January, February, March, April and May.  This is where TurboTax is getting the 5.5 months of depreciation and is correct if the selling date is June as you indicate.

Please add a comment if you have more questions.

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1 Reply
DianeW
Expert Alumni

Why does TT calculate part year depreciation for real estate different from IRS rules? Shouldn't it be mid-month of month sold? TT calculates it based on prior month.

If the house was sold in June, then under the MACRS mid-month convention you get a half month for June and a whole month for January, February, March, April and May.  This is where TurboTax is getting the 5.5 months of depreciation and is correct if the selling date is June as you indicate.

Please add a comment if you have more questions.

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