Unable to change Rental Real Estate Recovery Period under assert entry worksheet

Forum|Forum|1 year ago
March 15, 2025
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Hi,

For depreciating a Residential Real Estate property, I am using StraightLine MACRS method.

I am also using TurboTax Delux Desktop.

For some reason turbotax does not allow me to change recovery period to 27.5 years. It selects 40 years and the box color is black, meaning I cannot modify it.

Also MACRS convention is set to MM and box color is black.

Best answer by DianeW777

It's not allowed. Foreign real estate rental property must use the straight line method over 40 or 30 years depending when it was placed in service. The 27.5 year selection is only for property situated in the US. The alternative depreciation system (ADS) must be used for this property. See the note and the chart in the publication link below.

1 40 years for property placed in service before January 1, 2018. However, the ADS recovery period for residential rental property placed in service before January 1, 2018, is 30 years if the property is held by an electing real property trade or business (as defined in section 163(j)(7)(B)) and section 168(g)(1)(A), (B), (C), (D), or (E) did not apply to the property before January 1, 2018.
- IRS Publication 527

DianeW777

It sounds like you may have accidentally selected that the residential real estate property is in a foreign country. Double check that to remove the selection if applicable.

The MACRS convention should be set to MM which means mid-month. This simply means that for the month placed in service and the month removed from service a half a month depreciation is claimed. Every full month uses the full month of depreciation.

Please update here if you have additional questions and we will help.

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atatarokhAuthor

Thanks for your prompt response. The rental properties are indeed located in a foreign country, Canada. Last year, my CPA used SL MM 27.5 years. Why can’t I use the same?

DianeW777Answer

1 40 years for property placed in service before January 1, 2018. However, the ADS recovery period for residential rental property placed in service before January 1, 2018, is 30 years if the property is held by an electing real property trade or business (as defined in section 163(j)(7)(B)) and section 168(g)(1)(A), (B), (C), (D), or (E) did not apply to the property before January 1, 2018.
- IRS Publication 527

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