Room rental in personal residence depreciation

Forum|Forum|2 years ago
April 3, 2024
1 reply
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I purchased my home in 2011 and in 2023 I rented out a room part time.
I have previously rented the entire home.

For depreciation, when I enter the room rental as an asset, TT asks for date acquired, 2011, and date placed in service 2023. For all the different improvements done, do I need to enter each one separately with it's own date, or can it be lumped all together with the same date put in service?

Should I subtract prior depreciation from the cost in this first entry of the "room rental?"
Do I reduce the entry by the percentage of the home rented?
I see where I can enter the business use percentage in TT and the software will do that calculation for me.
thanks for any help!

TurboTax Home & Biz Windows

MinhT1

As this is the first time you rented out one of your rooms, the date placed in service is the date you started renting out.

You can add all the improvements you made since you bought the home to the purchase price to have the cost basis of your home (excluding land).

As you are only renting one room, you have to calculate the rental percentage (for example by dividing the rented area by the total area of your home). Then multiply the cost basis of your home by the rental percentage to arrive at the cost basis of the rented area, which is used for depreciation.

Also read this IRS publication, paragraph on Renting Part of Property on page 25.

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Carl11_2

Employee

There is a problem when renting out "a part of" your home. Chances are high the depreciation figured for that first year will be wrong. When (not if) that happens let me know and I'll show you how to fix it so that you can still e-file.
To confirm the correct depreciation amount for the first year, use the MACRS worksheet on page 36 of IRS Publication 946 at https://www.irs.gov/pub/irs-pdf/p946.pdf For line 6 of the worksheet, use Table A-6 on page 71.