Question

How do I calculate depreciation on a partnership 1065 return for a rental house purchased 2016, converted to personal 1-1-17, and then converted back to rental 6.1.18?

Forum|Forum|7 years ago
June 6, 2019
1 reply
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The house was ready to rent in Dec 2016 and depreciation was deducted. In Jan 2017 my son moved into the house and paid very little rent. I deleted the asset and no deductions were taken in 2017. My son moved out May 31, 2018. I advertised it for rent June 1 and a renter moved in June 18, 2018 and is paying full market rent.

If I input with June 1 service date, TurboTax calculates special depreciation and there is no place to input depreciation deducted in 2016. If I reject the special depreciation, then I cannot take special depreciation on other rental properties.  If I input the original service date of Dec 14, 2016, then it calculates a whole year of depreciation, which is not correct.

How do I input into Business TurboTax so the depreciation on the 1065 return  is correct?

Carl11_2

Employee

" my son moved into the house and paid very little rent."

That actually doesn't matter. Rent is rent - be it a little or a lot. But I do need more information before I can provide you accurate information that would be helpful to you.

- Who are/were the partners in this partnership? Two people that were married to each other at the time the partnership was established? More than two people? What's the relationships (if any) between the partners?

- Did/does this partnership have more than just the rental property? This matters, because if the property was converted to personal use and the partnership had no other source of income to report, then the partnership ceased to exist on the date of conversion to personal use. In such a case, a "final" partnership return was required, with final K-1's issued to all partners.

" I deleted the asset and no deductions were taken in 2017. My son moved out May 31, 2018."

So you mean to say that you have more than one year of rental income that was never reported to any taxing authority on any tax return?

T

TBK4Author

My husband and I (married) are the partners, along with another LLC that is also owned by us, so his use is attributed to us as our personal use. The partnership owns many assets, including several other rental properties. All of the other rental properties had net taxable income. There were no rental losses on the other rental properties. Our son was unemployed and being supported by us. He was living there rent free, so I should not have said little rent. Because there was no rent, I did not take any deductions after 12-31-16 until he moved out and an independent renter moved in June 2018.