Manually enter rental property depreciation data from 2024 tax return

[yosemite798]

Hello everyone, 

   I am in the process prepare my 2025 tax return.

   Software: TurboTax Premier 2025 desktop edition

   Filing status: married file jointly. 

   2024 tax return prepared by accountant. (I only have PDF file)

   We have two rental properties: one single family house, one townhouse. 

    I am working on single family house first

   On Confirm your prior depreciation scree, it shows two questions: 

   1. Total Depreciations claimed in previous years

   2. Total AMT Depreciation claimed in previous years

  On 2024 Federal Summary Depreciation Schedule page 1

   Under Prior 179/SDA/DEPR the amount shown is: $47,998 (Single family house)

  Under Current DEPT column the amount shown is: $16,224 (Single family house)

  Should I add up $47,998 and $16,224 then enter the sum for Total Depreciations Claimed in previous years?

  Or I should use data listed under Total Depreciation section.

  Total depreciation section data for single family house

  cost basis: $1,008,387

  CUR/179/SDA/: $3,529

  Prior 179/SDA/DEPR: $49,998

  Current DEPR: $17,816

   Total depreciation section data for Town house

    cost basis: $149,000

   CUR/179/SDA/: $0.0

   Prior 179/SDA/DEPR: $6,806

   Current DEPR: $2,438

2. Total AMT Depreciation claimed in previous years

     Which amount should I use on 2024 Federal Alternative Minimum Tax Depreciation Schedule?

     I attached some screenshot from my 2024 tax return for reference purpose. 

     Confirmation your prior depreciation2024 summary depreciation schedule2024 AMT Depreciation Schedule

[DianeW777]

It depends. For the house, capital improvements the regular and AMT depreciation will be the same since straight line depreciation is used.

• 3-E0-1 | Add the current and prior depreciation , per your sheet = $64,222
• 7-EO-1 = $997
• 8-EO-1 = $858
• Continue for each asset adding the total prior depreciation plus the current amount from your 2024 tax return

For every asset that is 27.5 year recovery the AMT depreciation will be the same as regular depreciation.

[yosemite798]

Hello @DianeW777 , 

  Thank you for providing detailed explanation for my question. 

  I have additional questions regarding asset depreciation. I hope you or other community members can help me on the topics. 

  1. Depreciation not calculated, Expense shown as zero for single family house. 

      After I enter $64,222 for total depreciation claimed in prior years and total AMT depreciation claimed in prior years. The Expense show as zero. I live in Texas. Do this have something to do with my state?

 2. How to calculate total depreciation claimed in previous years and total AMT depreciation claimed in previous years for an asset with a 5 year depreciation life

     under Machinery and Equipment section
   10. E-01 Furnace: acquired date 2/01/2024,
         CUR 179/ SDA: $2,934
         Current DEPR: $391.00
         Method: 200DB HY | Life: 5

Should I enter $391 or $3,325 ($2,934 + $391) for total depreciation from prior years?
Should I enter same result for Total AMT depreciation claimed in previous years?

  3. My accountant left out the following assets on digital copy of 2024 tax return (Federal Deprecation Summary Schedule page and 2024 Federal Alternative Minimum Tax Depreciation Schedule)

1. E-01 windows  (date acquired: 5/13/2024, method: S/L, life: 27.5)
2. E01 furnace (date acquired: 2/01/2024, CUR179/SDA: $2,934, Current DEPR: $391)
3. E-01dryer (date acquired: 8/29/2024, life 5, CUR179/SDA: $595, Current DEPR: $79) on digital copy of the tax return the dryer’s life listed as 27.5. I think the 5-year depreciation life is correct.

I would like to know which column on 2024 Federal AMT depreciation schedule corresponding to CUR179/SDA and Current DEPR  section data (e.g. $2,394 should go under AMT Prior DEPR or AMT DEPR section2024 Federal Summary DEPR-paper2024 AMT DEPR-digital copy)?

[DianeW777 · Accepted solution]

The answers to your questions are shown below. Please verify the entry of your cost basis for each asset, the date placed in service and to allocate the appropriate amount for land you can use your tax assessment documentation to divide the land by the total to arrive at the percentage of the entire cost of the property that applies to the land. Your previous accountant should have the figure separate from the house/building itself.

1. Depreciation not calculated, Expense shown as zero for single family house.  After I enter $64,222 for total depreciation claimed in prior years and total AMT depreciation claimed in prior years. The Expense show as zero. I live in Texas. Do this have something to do with my state?

1. No, living in Texas has nothing to do with it. Be sure you entered the cost of the entire property and then only the land cost and the date placed in service. You haven't reached 27.5 years yet so the entry is the key. Review each asset for the correct dates and numbers noted.

2. How to calculate total depreciation claimed in previous years and total AMT depreciation claimed in previous years for an asset with a 5 year depreciation life.  

1. Straight line depreciation is used for AMT- (half year the first year and last year)  and full year for each year in between. The rate for 5 year property is 10% First and last year, then 20% for each year in between. It actually a six tax year deduction. Regular depreciation is the following rates for each year 20%, 32%, 19.2%, 11.52%, 11.52%, 5.76% (= 100%). This is an accelerated depreciation allowance.

     under Machinery and Equipment section
   10. E-01 Furnace: acquired date 2/01/2024,
         CUR 179/ SDA: $2,934
         Current DEPR: $391.00
         Method: 200DB HY | Life: 5  - Enter $3,325 ($2,934 + $391) for total depreciation from prior year

3. My accountant left out the following assets on digital copy of 2024 tax return (Federal Deprecation Summary Schedule page and 2024 Federal Alternative Minimum Tax Depreciation Schedule)

1. E-01 windows  (date acquired: 5/13/2024, method: S/L, life: 27.5) - All prior depreciation for both regular and AMT (2024 plus total prior years total amount)
2. E01 furnace (date acquired: 2/01/2024, CUR179/SDA: $2,934, Current DEPR: $391)- See above 
3. E-01dryer (date acquired: 8/29/2024, life 5, CUR179/SDA: $595, Current DEPR: $79) on digital copy of the tax return the dryer’s life listed as 27.5. I think the 5-year depreciation life is correct. - 5 year should be the correct recovery period for a dryer. Use the method above for the dryer using 5 year recovery.

@yosemite798 

[yosemite798]

Hello @DianeW777 ,

   Thanks for replying to my message with detailed feedback. 

   As I progress through the deduction and credits section, I have following questions. I hope you and other community members can provide some feedback. 

   1. After entering data for 2nd furnace and dryer. The calculated expense/depreciation value is 0. I would like to know if this is correct outcome. 

       1a. On the screen ask If you took section 179 deduction on this item in a prior year, enter the amount here screen:  I entered $2,934

       1b.  for 2nd furnace, Federal Depreciation Schedule 2024 has information listed below

               date acquired: 2/01/2024 |

               cost basis: $4,890

               cur 179 bonus: blank |

               special depr allow: $2,934

               depr basis: $1,956

               current depr: $391

 2. In TurboxTax 2025 Premier I added 2nd furnace and dryer as a 7-year asset instead of 5-year asset.

     Will this trigger an IRS audit? 

        2a. There is no appliance option under asset class (5-year depreciation life): computer, video, photo and telephone equipment in TurboTax 2025 Premier desktop edition.

       I attached some photos from asset summary page (2025) and Schedule E worksheet page (2025) for reference purpose. 

                section 179 deduction prior year2nd furnace depreciation detail pageworksheet-1workshhet-2worksheet-3deduction summary page

[RobertB4444]

1. Yes, the 179 deduction should have reduced the depreciable basis to zero for this year after taking it last year.

2. Changing the depreciation schedule of the furnace will not necessarily trigger an audit.  But if you do change the schedule you're expected to file form 3115 and notify the IRS of the change even if the change is a correction to what it should have been.  Form 3115 requires the desktop version of TurboTax, which you have already said that you are using, and is added in forms mode.

@yosemite798 

[yosemite798]

Hello @DianeW777  and @RobertB4444 ,

   Thank you for providing answers to my questions regarding rental property depreciation. 

    I was able to enter all assets' data on 2025 tax return.