Rental Property Depreciation and Business Use Percentage

Forum|Forum|4 years ago
February 8, 2022
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In 2021, I bought a new home and turned my previous home into a rental property. This is my first time owning rental property, and I am a little confused on how to complete the depreciation section. The box that is confusing me is the "Percentage of time I used this item for this business in 2021:". I am confused as to how this calculation works. The program already asks you what date you started using the property for the business, so is this box asking if it was 100% business use after that date? The box also seems to auto calculate based on start date, but that seems to reduce my depreciation twice. For example:

Full Year depreciation, 100% business use: $6,970

Starting June 1st, 100% business use: $3,939

Starting June 1st, 59% (TurboTax's auto-calculated percentage) business use: $2,324

Which of these entries is correct? The third option seems to be what TurboTax automatically applies, but that seems like it's giving me both a partial value and a partial year. Can someone clarify how this should be filled out? Screenshot of boxes in question attached. Thanks in advance!

Best answer by ColeenD3

Yes, you are correct and so is the screenshot. You did not originally use the property for business, you converted it. Once converted, it is 100% business.

ColeenD3

Once you convert your property from personal to rental, it is 100% business use. The other option is for people who have vacation homes and live in the home a percentage of a time and rent for certain periods.

DragonVTAuthor

So, just to make sure I am completely clear, the way I have completed this section in the screenshot is correct? Start date 6/1/2021 and then 100% business usage, since it is now a full time residential rental under a 12 month lease?

ColeenD3Answer

Yes, you are correct and so is the screenshot. You did not originally use the property for business, you converted it. Once converted, it is 100% business.