If I delete a rental last claimed on 2021 taxes, and not use 4562, how do I determine accumulated depreciation for future tax filing? What past year tax form will I use?

Forum|Forum|3 years ago
April 5, 2023
1 reply
0 views

The Form 4562 looks too complicated, so if I just delete the rental property this year, when I rent it again can I get the information I need for accumulated depreciation from prior taxes, if so would the information be gotten from the last tax year it was claimed as a rental? Thank you.

TurboTax Premier Online

ThomasM125

Depending on which version of TurboTax you are using, you may have a Depreciation Report included with the forms and schedules you can see when you print your tax return. If so, the accumulated depreciation will be listed on that form by asset. You cannot get the accumulated depreciation from Form 4562, as it only shows the depreciation for the current year.

As a practical matter you can enter the asset in again when you start renting the house in the future and TurboTax will calculate the prior years depreciation based on the cost of the asset and date put into service and any special depreciation you enter. However, that number may not be accurate since you suspended the depreciation for a year or more, but it will give you a starting point to calculate the correct prior years depreciation.

**Say "Thanks" by clicking the thumb icon in a post**Mark the post that answers your question by clicking on "Mark as Best Answer"

Carl11_2

Employee

You cannot get the accumulated depreciation from Form 4562, as it only shows the depreciation for the current year.

Not an accurate statement really. What it is correct for the "official" 4562 that prints in portrait format, there are two "unofficial" 4562's for the rental property. Both print in landscape format. One is titled "Depreciation and Amortization Report" and the other is "Alternative Minimum Tax Depreciation". The first will show you both the total of all prior years depreciation, and the current year depreciation. You add those two amounts together for the total depreciation taken.

However, that number may not be accurate

That number will be just flat out wrong, any way you look at it. Do it that way "will" result in incorrect numbers. The correct method is this:

Using the 4562 that prints in landscape format titled "Depreciation and Amortization Report" from the last tax return you reported the property on SCH E, you have to add together the amounts in the "prior years deprec" column and the "current year deprec" column to get the total depreciation taken for the property, and any other assets listed if they are still included with the property being rented.

Next, you have to subtract the total depreciation taken from the original cost basis used when you originally started depreciating the property to get your new "adjusted" cost basis. The depreciation starts over from year one using the new adjusted cost basis, for the next 27.5 years.

To that cost basis you should add the cost of any property improvement costs you incurred after you converted the property to personal use, and before you converted it back to a rental the 2nd time.

In TurboTax where it asks for COST and COST OF LAND, you will enter the adjusted cost basis in the COST box, and you will enter the same original cost in the COST OF LAND box, that you entered when you originally rented the property. This is because the cost of the land does not change, since land is never depreciated.