rental property depreciation and married filing separate

Forum|Forum|5 years ago
July 12, 2020
2 replies
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My spouse and I file married filing separate in California. We file our rental property income and expenses with schedule E with both of us claiming 50% ownership and allowing Turbo Tax to automatically calculate the 50%. But what about the depreciation? Should we manually enter 50% of the total cost basis for depreciation in Turbo Tax?

Carl11_2

Employee

Test it both ways. I would expect the program to do the split for you and would fully expect it to. Would be interested to know what you find. Since CA is a community property state, you're required to split everything anyway, right down the middle.

awillis393Author

Ok thanks, looks like it didnt automatically split. Also the "Cost" field in turbo tax says "The amount you paid, which represents your ownership percentage amount".

Carl11_2

Employee

"The amount you paid, which represents your ownership percentage amount".

Ah! Didn't realize that because I've never paid attention to that specific statement. So it sounds to me like you enter 50% of the cost basis for all assets, and your sales price is 50% of whatever the deal is.

This raises a possible concern with me, on if your 50% of the cost has been what's depreciated over the years on your specific SCH E. If not done correctly, then the total depreciation between the two owners would be double what it should have been. Might be worth double-checking unless you know for sure, otherwise.

speluso

Can depreciation bring taken for a rental property owned by a married couple ?

KrisD15

If you are asking if the depreciation on a rental owned by a married couple can be split between the two owners, yes, if the rental income is divided, all the expenses and depreciation would be divided the same way.

To do this in TurboTax would be difficult since depreciation is based on the value of the assets, such as the building.

To do this properly, the rental would need to be entered on each return and half of everything reported. The rental would be entered as having half the total value.

You could do this (entre as two separate rentals) if you plan to file separately always.

If you might go back and forth, you might report the rental on one return and claim all the income and expenses, including depreciation, then ALSO have an expense for that rental equal to half the profit.

On the other return, set-up a rental with ZERO asset balance and claim half the profit as income and no expenses, no depreciation.

You'll need to do something similar when the property is sold.

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