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I went to CPA for 2016 return but decide to do 2017 myself. On depreciation basis of a rental, she put it less than my cost price (excl. land). Does anyone know why?

Forum|Forum|7 years ago
June 3, 2019
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The property was purchased in Feb. 2016 at $130k, which I believed it at a fair market price. Land value was $21k based on tax bills. I also believed that she/CPA included some closing cost, such as stamp tax, recording fee, etc., in the basis of depreciation. It turned out that the number should be somewhere over $109k, but only $105k was used for basis of depreciation on my 2016 return.

Does anyone know a reason to get this number? Can I update the depreciation basis to higher ($109k) in 2017 return?

Thanks!

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Best answer by kprice3

No-You would need to amend your 2016 tax return to claim the correct basis amount, starting the first year. I would recommend contacting your accountant. Some of the items at closing that you mentioned or others, could have been claimed as expenses in 2016. You really need the computation of the basis amount.

Is the number allocated to land + the amount allocated for improvements add to $130,000?

Property tax bills are almost always significantly less than market value. They are excellent, though, to help calculate the improvement to total property cost allocation percentage to apply to actual purchase price.

K

kprice3Answer

No-You would need to amend your 2016 tax return to claim the correct basis amount, starting the first year. I would recommend contacting your accountant. Some of the items at closing that you mentioned or others, could have been claimed as expenses in 2016. You really need the computation of the basis amount.

Is the number allocated to land + the amount allocated for improvements add to $130,000?

Property tax bills are almost always significantly less than market value. They are excellent, though, to help calculate the improvement to total property cost allocation percentage to apply to actual purchase price.