I am 50% owner of rental property in year 1. I input 50% ownership. Will Turbo Tax discount the value of the house/asset when I enter the asset cost by 50%?

What a great question.

It should but there appears to be a bug for depreciation expenses. It seems to work correctly for regular expenses. Or perhaps there is a reason TT does it this way, but if so the questions should be much more clear and should expressly tell you to enter only your share in the asset entry questions.

The way to check is to review the "Schedule E Wks" (easy to do in TT Desktop in forms mode, otherwise you may need to pay TT and generate a review PDF. See https://ttlc.intuit.com/turbotax-support/en-us/help-article/import-export-data-files/save-2021-turbotax-online-return-pdf/L8dHfRkpT_US_en_US?uid=ld64mqk1 )

My suggestion is that you enter the assets as your % (e.g. 50% of total). But that you carefully check your Schedule E Worksheet, Schedule E, and Depreciation Report before you file to make sure the amount that winds up ion Schedule E line 18 is the correct amount.

Here is a screenshot from a test case I did using 50% of a rental property. Note that the depreciation in col a is not 50% of the total in col a.

I will try to get this reported as a bug and/or question clarification request.