Question

How can I change Depreciation Life from 27.5 years to 39 years for Rental Property to match my previous tax returns since my rental was put into service 11/2003?

Forum|Forum|7 years ago
June 6, 2019
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Help - I'm using TT for the first time and inputting Depreciation info for my rental property. I started rental service 11/2003 and it defaults to 27.5 years to fully depreciate, however, my previous 2016 Tax return prepared by accountant shows 39 year life, how do I change this in TT for 2017 tax year so it aligns with my previous returns? Are there any one-time adjustments I need to make or is the change something I need to do every year?

TurboTax Premier Windows

C

Coleen3

Employee

Rental property in the US is depreciated over 27.5 year. Non-residential real property such as an office building is depreciated over 39 years. Unless your property is outside the US, your accountant entered the information in the wrong place.

Even if it is foreign property, the ADS depreciation is 40 years, not 39. If you have not had the property in service for too long, the easiest solution is to amend. If you were to indicate that it was non-residential real to get it to match, you are not accurately filing your return. In addition, you are not getting your proper depreciation amount.

Residential rental property 27.5 years

Nonresidential real property 39 years

https://www.irs.gov/publications/p946#en_US_2017_publink1000107557%3E

One solution is to elect an accounting method change and file a Form 3115 in the current year and take the prior depreciation as a section 481(a) adjustment. [land value is separated, land is not depreciated]

Below are the IRS links related to the change in accounting method. TurboTax does not have that form.

May be these will help

Form 3115, Application for Change in Accounting Method

http://www.irs.gov/uac/Form-3115,-Application-for-Change-in-Accounting-Method

Instructions for Form 3115 (03/2012)

http://www.irs.gov/instructions/i3115/index.html

Form 3115,

http://www.irs.gov/file_source/pub/irs-pdf/f3115.pdf