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No depreciation calculated by TT on foreign vacation rental property

Forum|Forum|4 years ago
March 27, 2022
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I purchased a vacation condo In Mexico in 2021 and put it into service in July. I only had one rental, in December. TT is not calculating any depreciation expense at all. Why is this? I expected it to at least prorate it in some manner. I did not use the condo myself in 2021.

Best answer by DianeW777

The rule of using the property for less than 15 days during the year does apply to property that is used for personal purposes and for rental purposes. This was noted by our awesome Tax Expert @MinhT1.

Since you did not use this rental for personal purposes you should not be selecting 'Vacation or short term (used for personal purposes and rented for short term period)'. According to you there was no personal use.

Instead you can select 'Other', then you should also select it was rented all year (TurboTax knows by the date it was available that it wasn't a full year). This will allow the expenses during the period the rental was available as well as the 27.5 year depreciation method.

This will change in the future if you do use it for personal purposes at any time.

M

MinhT1

Did you rent the condominium for less than 15 days in 2021?

There's a special rule if you use a dwelling unit as a residence and rent it for fewer than 15 days. In this case, don't report any of the rental income and don't deduct any expenses as rental expenses.

Please read this IRS document for more information.

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S

ssmith8523Author

Hi,

Thank you for the response, I suspected there was a minimum amount of time required for rental. However, I did not use the property for a residence - I did not spend any time there at all.

D

DianeW777Answer

The rule of using the property for less than 15 days during the year does apply to property that is used for personal purposes and for rental purposes. This was noted by our awesome Tax Expert @MinhT1.

Since you did not use this rental for personal purposes you should not be selecting 'Vacation or short term (used for personal purposes and rented for short term period)'. According to you there was no personal use.

Instead you can select 'Other', then you should also select it was rented all year (TurboTax knows by the date it was available that it wasn't a full year). This will allow the expenses during the period the rental was available as well as the 27.5 year depreciation method.

This will change in the future if you do use it for personal purposes at any time.

**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

- Foreign rental property is depreciated over 30 years if place in service in 2018 or after. (Not 27.5 years).

- Business use percentage is 100%, as what you used it for before placing it in service doesn't count for anything. It was rented is "the whole year", and the program (not you) will take into account the in service date.

- Days of personal use will be ZERO, since you did not live in the property for any reason after it was converted to rental and placed in service. If you lived in it before it was placed in service, that time does not count for anything. (That time does matter for a short term rental, of which it appears yours is not short term)

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ssmith8523Author

@DianeW777

I made the changes as you suggested, and it had no impact on what I was able to deduct including zero depreciation! Oh well, we tried!

Thank you.

A

AmeliesUncle

Where are you seeing zero depreciation?

Look at Line 18 of Schedule E. Is that zero or blank? Or is there an amount there?

If it is showing zero/blank, then print your 'all worksheets' and look for the "Depreciation and Amortization Report" (the sideways looking spreadsheet). Find the rental property on there, and then tell us all of the numbers that are showing up on that worksheet.