How to depreciate new roof in turbotax? can you please provide step by step instruction?

[gwendolynwhitman]

I followed the instructions for the new roof but at the end it also asked when was it put into service or something so I again put in the date the roof was finished.  The roof cost  $5482 but after putting all the information in it only depreciated $42 for 27.5 years.  This just seems low to me.  Any comments if it could be correct? or any ideas  The date of install was 10-31-2018 and depreciation method was SL.  MACRS  Convention was MM    Any help would be appreciated.  Could it just be that low the first year since it was not depreciated for a full year only 2 months?

[DS30 · Accepted solution]

To enter rental information in TurboTax, log into your tax return (for TurboTax Online sign-in, click Here and click on "Take me to my return") type "rental income and expenses" in the search bar then select "jump to rental income and expenses". TurboTax will guide you in entering this information.

Alternatively, to enter this transaction in TurboTax Online (for TurboTax Online sign-in, click Here) or Desktop, please follow these steps:

1. Once you are in your tax return, click on the “Federal Taxes” tab ("Business" tab in TurboTax Home & Business)
2. Next click on “Wages & Income” ("Business Income and Expense" in TurboTax Home & Business)
3. Next click on “I’ll choose what I work on”
4. Scroll down the screen until to come to the section “Rental Properties and Royalties”
5. Choose “Rental Properties and Royalties” and select “start’ (or “update” is you have already worked on this section)

Enter your rental property information through the TurboTax guided questions until you come to a screen that is titled, Your "rental property name" rental summary. You will enter your rental property house here under "assets/depreciation"

• Under the asset/depreciation section - select start or add an asset
• Select "yes" to "Do you have assets for this property that can be depreciated?
• About 3 screens in, you will enter the roof as an asset here. This is where your enter all your rental assets (including capital improvements) 
• For any capital improvements (such as a roof), you will select  "rental real estate property"
• Then for the rental house, select "Residential Rental Real Estate"
• On the next screen, you will enter information about your Rental property asset including:
• Property description - New Roof
• Cost - The total cost of the roof including materials, installation and sales taxes
• Cost of Land - Leave this blank
• Date purchased or acquired - Date the roof installation was finished
• On the next screen select "none of the above" and Yes -100% business use.  
• Then you will get an asset summary page showing current year's deprecation. If you select show detail you can review your entry details
• You can add additional rental assets on the next screen by selecting "add an asset"

[ChuckandMarlo]

Thank you for these instructions. This helped me since I was totally lost on this. A couple follow-up questions though:
- For "I purchased this new", wouldn't we check "yes" for a new roof? It seems so according to the help link
-I was renting out my condo and moved in halfway through the year. In that case, do I put "NO. I  have not always used this 100% of the time for this business"?  The links are not very helpful.  Thanks

[jueq92mxka]

Is TurboTaxDeeS right? Wouldn't a new roof constitute "I purchased this asset new"?

[khensley05]

Didn't this change this year?  Now you don't have to depreciate a roof over time.  You can take a one time deduction, but where do you enter it?  Would it now go under repairs?

[jueq92mxka]

Only if you meet the criteria on the page "Let's see if you can claim these improvements as expenses".

[gwendolynwhitman]

I followed the instructions for the new roof but at the end it also asked when was it put into service or something so I again put in the date the roof was finished.  The roof cost  $5482 but after putting all the information in it only depreciated $42 for 27.5 years.  This just seems low to me.  Any comments if it could be correct? or any ideas  The date of install was 10-31-2018 and depreciation method was SL.  MACRS  Convention was MM    Any help would be appreciated.  Could it just be that low the first year since it was not depreciated for a full year only 2 months?
gwendolynwhitman a few seconds ago

[sfeldman]

I am not a tax professional, but I replaced a roof on a rental property and figured out how to do it.  As others have noted, you must depreciate the new roof as a separate asset.  But that is the easy part.  You also need to remove the old roof from the value of the rental property, since you have been depreciating the building and roof as one combined asset up to the point you replaced the roof.  From now on you will have two separate assets depreciating on their own schedules: the rental property building and the new roof.  You need to calculate the value of the old roof when it was new or when you bought your rental property.  You use the Consumer Price Index numbers (available online) to figure this value. Then you use TurboTax to sell/dispose the old roof, and manually reduce the remaining depreciation of the building on the appropriate TurboTax screen.  The IRS actually has pretty good instructions on how to do this, please refer to <a rel="nofollow" target="_blank" href="https://www.irs.gov/irb/2014-36_IRB#TD-9689">https://www.irs.gov/irb/2014-36_IRB#TD-9689</a>.

[muggins101]

i believe that $42 is correct. 27.5 years = 330 months. Divide $5482/330 and deprciation per months is $16.61.

Your new roof was in use 2 months. Mid month comvention means you multiply month my 2 months plus a mid month or half. $16.61 x 2.5 = $41.52. Round uo to $42. There you go.

[ebluh]

Hi,

This might be an old thread but you were the only one that explained it in great detail. Can you explain “then you use TurboTax to sell/dispose the old roof and manually reduce the remaining depreciation of the building”. I have three items listed now:

property depreciation $7,709

new roof depreciation $5

old roof depreciation $100

new roof cost $3,455 installed 12/17/2023. Estimated expense for this assets= $5

Can you explain what number I would need to manually reduce? Should I expect three items? And do I take $7709-$5?

Thanks,

Connie

[PatriciaV]

First adjust the purchase price of the building by the estimated value of the old roof when the building was put into service. Then adjust the accumulated depreciation of the building by the calculated value (as shown above) for the old roof. Add the new roof as a new asset (improvement).

Example:

Building Purchase Price = $127,000

Accum Depr Building = $4,000

Est Value Old Roof = $27,000

Est Depr Old Roof = $850

Adjusted Basis for Building = $127,000 - $27,000 = $100,000

Adjusted Accum Depr for Building = $4,000 - $850 = $3,150

Note that you will need to use TurboTax for Desktop in order to manually adjust the Asset Worksheet for the building. The boxes to make your adjustments are Line 4 - Total Cost when acquired, Line 10 - Prior Depreciation, and Line 12 - AMT prior depreciation. You may wish to use the option to Add Supporting Details so you can document your changes (right-click on the box). Enter the original number as a positive number then the adjustment as a negative.

Look on the Depreciation Report for the cost and depreciation numbers you'll need for this entry.

@ebluh 

[ebluh]

Hi @PatriciaV ,

Thank you for your detailed answer. For Line 10 - Prior Depreciation, and Line 12 - AMT prior depreciation

what would those numbers be in your example? I am a little confused as what would be the "prior depreciation value". I have checked my table and it says $0 for both so I wasn't sure how to get this value as the roof and property were bundled as one previously. Would it be $27000 for prior depreciation and $850 for AMT prior depreciation?

And would I need to enter anything under "Dispositions"?

Thanks,

Connie

[PatriciaV]

No, you would not complete the Dispositions section of the Asset Worksheet. The old roof is included in the basis of the building, so you adjust that asset rather than disposing of the old roof. This is the entry you make on Line 4.

Unless this is the first year you've owned this property, you should have Prior Depreciation on the report. I'll attach a screenshot of the 2021 TurboTax Form 4562 Depreciation report to show which column you need.

Line 10 Prior Depreciation in my example would be the Adjusted Accumulated Depreciation = $3,150.

For Line 12, you will need to refer to the 2021 AMT Depreciation Report (see screenshot #2) from last year. There will be an amount for Prior Depreciation on that report. Reduce that amount by the same amount you used for Line 10, then enter the result on Line 12.

[ebluh]

@PatriciaV , all of that makes sense! This is very helpful. I appreciate your time.

When we adjust line 4: (Purchase Price - Cost of Old Roof) do we need to adjust line 8 (total cost of land included in cost)? I am thinking no as the taxable land amount hasn't changed.

Thanks!