I had been filing my taxes for a decade or more using Turbo Tax Premium, and it is tracking the unclaimed pending amortized amounts of rental property depreciation, rental home impovement expenses, & repairs etc since I started renting couple of my properties in 2023 and 2024. TTax allocated the proportioned amounts for the years 2023, 2024 during which I rented my properties. As of end of 2024 I still have substantial unclaimed amortized depreciation as well as unclaimed amortized capital expenses on two rental homes. But unfortunately I got laid of 2025, and after trying quite sometime, just gave up looking! So I expect my income for the next year onwards in the lowest bracket. So I am trying to figure out how to claim the pending amounts of amortizable rental property depreciation as well as rental property improvements on both homes as a lumpsum in year 2025 itself. Unfortubately I filed my 2023 and 2024 returns with amortization than lumpsum since I didn't expect the lay off to tilt the boat this hard! I found I need to change the accounting method, and that to address these issues I need to file form 3115. Please help clarify the following.
- Both rental homes are brand new, so there would be substantial unclaimed property depreciation (since I so far claimed amortized amounts for just 2 years only), if I now try to change accounting and want to claim it as lumpsum, does IRS set any limits on how much it allows claiming in a year and thus still forcing me to carry forward some pending amounts to subsequent years?
- Similarly, rental home improvements too still have non-trivial unclaimed expenses. Though it may not be as big as depreciation, will there be any per year limt on this as well?
- But I assume both will be combined into one amount, there may be an year limit as to how much of it can be deducted. Is that how IRS deals with even one time lumpsum approach?
- Like I mentioned TTax Preimium automatically does the proportioned deductions for these amortized expenses every year and carries the rest for next year whenever I file next. But I did not find any menu/GUI to do this accounting change in screens. But it is allowing me to input data directly into form 3115. I will study how to enter this. But my question is, if I figure out how to fill it and enter the whole pending amounts of depreciation and capital expenses of lumpsum into this manually enterd form, can and does merge such information with its GUI driven collection (that I normally do) of other information like wages, W2 details, deductions and calculate the compisite amounts for final fedetal and state taxes OR GUI collected info and manually entered form 3115 will remain independent and that I have to figure out the net tax burden?
- If I do form 3115 in year 2025 filing and switch accounting method to lumsum deduction, and if IRS limits per year lumpsum deduction to a lesser amount than my currently pending amounts, can Turbo Tax carry forward the remaining into 2026 and beyond automatically like it is currently doing for amortized approach OR I have to manually carry forward remaining deduction every year from 2026 onwards also? If so, wonder what form should I be using?
Please help, I researched a lot, but haven't gotten much out yet. Very much appreciate any leads.
