Depreciation of Rental Improvement - Need 27.5 years

Forum|Forum|3 years ago
March 6, 2023
2 replies
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I have is I have some improvements some years after purchase. When I enter "Improvements" in TT it takes the 15 year depreciation. However the tax code state the depreciation should match the original building 27.5.

Do you know where to make that adjustment?

TurboTax Home & Biz Windows

Best answer by Anonymous_

Use Residential Rental Real Estate.

Do not use any other class for improvements so that you match the original building (which should have a recovery period of 27.5 years).

Anonymous_Answer

Employee

Use Residential Rental Real Estate.

Do not use any other class for improvements so that you match the original building (which should have a recovery period of 27.5 years).

MikeSFAuthor

Thank you. And I'm guessing leave land as zero, correct?

Carl11_2

Employee

In the Assets/Depreciation section select the option to Add An Asset. As you work it through select "Residential Rental Real Estate" and the program will automatically set it up for 27.5 year depreciation.

Typically for a property improvement to the structure, the COST OF LAND will be zero. So make sure you enter zero for cost of land.

MikeSFAuthor

Great answer and thorough.. Thank you.

First year using TT so I need to transfer depreciation. My Windows are 10 year SL. How do I get a 10 year schedule?

Carl11_2

Employee

First year using TT so I need to transfer depreciation. My Windows are 10 year SL. How do I get a 10 year schedule?

WIndows are not depreciated over 10 years. I suspect you mean that you are "10 years into" depreciation on the windows. Since the windows became "a permanent and physical part of" the structure, they get classified the same as the structure itself and depreciated the same as the structure. So your windows would be classified as Residential Rental Real Estate and depreciated over 27.5 years, the same as the structure.

Since this is your first year with TurboTax, you just enter the same, original "in service" date for the asset. Then the program (not you) will figure the prior depreciation already taken, and continue from there. Don't be surprised on the prior year's depreciation figured by TurboTax is off by a few bucks. That happens because of rounding, and it has no impact on your tax liability. But when it displays the "prior year's depreciation" it figured, you can change it. Note that if you change it, that will affect and change the current year's depreciation. So that's why it's usually best to leave it alone.