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Question

Hi, I did a cost segregation study, so there is accelerated deprecation. Can you please advise how to reflect the accelerated depreciation in the TurboTax system?

Forum|Forum|5 years ago
February 13, 2021
8 replies
0 views

Currently, the TurboTax system automatically calculates my depreciation based on the building basis and a useful life of 27.5 years. However, I did a cost segregation study, so there is accelerated deprecation. Can you please advise how to capture this accelerated depreciation amount in TurboTax?

TurboTax Premier Online

ColeenD3

A cost segregation study tells you how to segregate specific aspects of any rental property, such as appliances and carpet. You don't accelerate the building. If you made improvements after the purchase, you would automatically segregate them. If you just bought the building and wish to segregate a specific asset, then you need to determine which they are and enter them separately from the house.

userdanloadirectAuthor

I agree - my question was around how to change the Building deprecation that is being auto-calculated by TurboTax.

It seems like you would have to first delete the auto-calculated deprecation. Then, go into Asset Summary and manually enter a new line item for the building/house.

ColeenD3

How is it structured? Did you just buy it or have you had it for some time? You would leave the house as it is, just change the basis to reflect the assets you are removing.

What assets do you have? Is it really worth your time to do this? How much are you going to gain by doing so?

nanosuna1977

Hi There. I am trying to do exactly the same as you with a cost segregation. Can we chat to exchange ideas? Were you able to figure out how to incorporate the cost segregation analysis in TurboTax? My email is [PII Removed]. [phone number removed]. Thanks in advance Orlando

ColeenD3

The answers are all in the previous posts. Some highlights:

A cost segregation study tells you how to segregate specific aspects of any rental property, such as appliances and carpet. You don't accelerate the building. If you made improvements after the purchase, you would automatically segregate them. If you just bought the building and wish to segregate a specific asset, then you need to determine which they are and enter them separately from the house.
You just have to find a way to allocate a reasonable amount to each asset and subtract it from the purchase price
From @CRitter3:
Ok ... the assets are still being depreciated only faster ... so I am not sure where you believe this saves you from having to recapture depreciation in the future when the assets are retired or sold.

Cost Segregation

Robert Slaughter

How do you get a cost segregation done?

nanosuna1977

I am working with a company that specializes in doing those type of analysis. Just Google cost segregation study in your area and you will find companies that do so. Hope this helps

MJM2022

Hello,

Just reading this thread from 2021. I am trying to input a cost segregation study for a newly acquired property that was put in place during 2021 and an older property that was put in place in 2019.

I'm struggling a bit with how to get this done in the turbotax online platform. Based on this thread was anyone successful in getting this entered correctly, and if so how/ where did you do this on turbotax?

Feedback is much appreciated.

DianeW777

The two properties must be entered separately. They were not placed in service the same year, so each has a different recovery beginning and ending period. Enter each asset with the date placed in service and the type of property. If this is real estate they must be entered separately for the same reason.

@MJM2022

For property placed in service prior to the current year, and if Section 179 had not been elected in the first year, then it cannot be elected in any succeeding year. Only property placed in service in the current year, that is not real property can use Section 179, election for 2021.

@nanosuna1977

Please update here if you need further assistance.

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Hazen33

@DianeW777 , somewhat related question for you. I did a cost seg study on a property, and I’m inputting the various line items in TT - 5 Year items, 15 year items, and then the 39 year items (Short term rental commercial property). I noticed for the 1st line item of the 5 year items, it gave me the recommended option to use the Section 179 for 100 depreciation but when inputting the 15 year item, it didn’t have Section 179 as an option and instead had the ‘Special Depreciation’ option, which I chose. So I have the 5 year items set as Section 179 and the 15 year item as Special Depreciation and then the rest over 39 years. Does this sound right to you? Thanks!

Scottwang

After I entered the land and property value. TT automatically depreciated by 27.5 years. How did you get to the page you mentioned?

Scottwang

@DianeW777 where in the TT system can I name the 5 year and 15 year bonus depreciation items? When I put in the land value and improvement value, it automatically goes to depreciate by 27.5 years. Thank you for what you do!

KrisD15

Bonus Depreciation can only be taken on assets you add, such as appliances.

When you first enter a rental, the program will treat the entire home as the rental and depreciate over 27.5 years.

Real Estate cannot use Bonus Depreciation.

Land does not get depreciated at all.

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Scottwang

@KrisD15 @What about the items that were bought with the house but can be depreciated over 5 years like carpeting and landscaping?

KrisD15

If you want to list assets separately, then enter the building and land separately with the lower value.

For example if you are going to list 10,000 worth of assets on a 300,000 purchase, the land might get 25,000, building 265,000 and then the assets.

You cannot report so much for the assets that you have nothing left for the house itself.

Once you enter the house and land, enter each asset you wish to depreciate separately.

Please be aware that if the rental is generating passive income/loss, you might be limited on the loss you are allowed to claim in the tax year and what you are required to carry-over.

Also, please be aware that depreciation is recaptured when the rental is sold.

Bonus depreciation is recaptured when sold OR converted to personal use.

If you report too low of a cost for the building (basis) when you sell you MIGHT have Depreciation Recapture AND Capital Gain.

If you list carpet as an asset, when it is replaced you will take the carpet off the books and enter the new floor covering as a new asset.

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nguyenmi2006

How can I file on Turbo Tax my cost segregativo? What form?