foreign rental property depreciation 30 yrs vs 40 yrs

Forum|Forum|4 years ago
March 20, 2022
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Hi,

I would like get some advice on foreign rental depreciation. I have a foreign rental property purchased in 2017 and made some renovation before I put in rental in 2017. The house itself and renovation cost have been depreciated by 40 yrs ADS during the past few tax season using turbo tax. In 2021, I made some other renovation and incurred some cost that I need to start depreciating in 2021. when I started file my 2021 tax, turbo tax uses 30yrs depreciation life for the renovation costs incurred in 2021. I am wondering if the renovation cost incurred in 2021 should be depreciated with 40 yrs or 30 yrs life? even the house itself will still be depreciated with 40yrs life.

Any help is very appreciated

Best answer by Critter-3

Your overseas property is depreciated over a 30-year or 40-year period, depending on when it was first rented, instead of the 27.5 years for domestic residential properties. *Prior to 2018, depreciation of foreign residential property was limited to 40-years. New assets placed in service now get the lower 30 year period.

Critter-3Answer

rpa2

Do you have the IRS publication number where I can see that? I went through the 527, 946, and 536 and I could not find anything. Any help will be very appreciated.

Carl11_2

Employee

See IRS Publication 946 at https://www.irs.gov/pub/irs-pdf/p946.pdf On page 33 of that document at the top of the 2nd column it lists Residential Rental Property at 30 years. You'll note there's a subscript "1" for that line. Reading note 1 states it's 40 years for property placed in service before Jan 1, 2018. So your property improvements that are classified as residential rental real estate that were placed in service on or after Jan 1 2018 are depreciated over 30 years.