deprecation on schedule e

[conveniencebrokerage]

Hello and good afternoon everyone, how do you calculate deprecation of rental property in proseries baic. I have a client that has a home worth 900,000 and i need to calculate the deprecation of the property in the taxes and what form do i need to fill out for this, Thanks for the replies  

[qbteachmt]

What the home is worth, isn't part of this. And is this rented out right now? When did they buy it and what is their Basis? "and i need to calculate the deprecation of the property in the taxes"

Depreciation isn't part of taxes.

[conveniencebrokerage]

The house bought in 2018, the house is rented right now the rental income for this person is 41,400 for the year,  he stated he did repair for amount 17,500 for home thanks appreciate for the help 

[TaxGuyBill · Accepted solution]

You fill out the information on the "Asset Entry Worksheet" to depreciate something.  You can either double-click the box for Line 18a of Schedule E, or scroll about 40% of the way down on the Schedule E Worksheet, and click the "Quickzoom" to open an Asset Entry Worksheet.

As was noted, you depreciate the Basis, which is usually the cost.  If the asset was converted from personal use to business or rental use, you use the LOWER of the cost or the Fair Market Value on the date it was converted.  You enter the TOTAL amount (building and land), and then you also enter the land cost (you may need to estimate that one).

You also need to ask about the details for that so-called "repair".  Spending $17,500 for a "repair" is unusual, and it might actually be an improvement that needs to be depreciated.

[conveniencebrokerage]

Thanks appreciate for the advice so in type of asset what type of asset is this there is a bunch of options if you dont mind me asking this part sorry to be a bother 

[TaxGuyBill]

For the depreciation of the building, you would choose category "I" for Residential Rental Real Estate, which is usually depreciated over 27.5 years.  

[conveniencebrokerage]

I know I’m asking you a 1000 questions but I really appreciate your help believe me . Do I still need to fill out the form 4562 deprecation and amortization worksheet or that’s not required since I did the asset worksheet now . Again apologize for these questions 

[TaxGuyBill]

No, ProSeries will fill out Form 4562 automatically based on the Asset Entry Worksheets.

The one slight catch on that is IF the rental were to rise to the level of a "Trade or Business" AND you wanted to use Section 179 for some qualifying assets, you would need to override Line 11 on the 4562.

[conveniencebrokerage]

when i fill out the asset worksheet the part where it says section 179 deduction do i need to fill that out or leave it black. The 4562 after fling out asset worksheet does not pop up open, is this normal only asset worksheet is shown, When i enter something on this section on 179 deduction it states that section 179 deduction is not allowed on real property, not sure what the program is asking again, thanks appreciate it again for the constant feedback 

[qbteachmt]

@conveniencebrokerage 

"The house bought in 2018,"

Then the Cost is the initial investment, there is Land and Building(s) and these are treated differently as Assets, because Land doesn't depreciate. And that depreciation should have started with the first year this was owned and rented. You cannot jump into this 3 years later.

"the house is rented right now the rental income for this person is 41,400 for the year,"

That means you have Income and there should be operating expenses.

"he stated he did repair for amount 17,500 for home thanks appreciate for the help"

And that Improvement is likely tracked as its own asset. Example:

Fix a broken window = Repair Expense.

Replace all windows = Improvement as Asset investment.

You need to find someone to mentor you on this, not over the internet. This is the place to learn how to use a program that you might be having trouble with, but you are supposed to know the regulations, what asset class, which depreciation schedule, how to figure basis, how to handle expense vs improvement, gain/loss, etc, for your client. You get that from professional training, continuing education, updates on the new tax rules, etc. You don't keep asking on the internet these basic questions for doing what you should know is your professional responsibility.

Asking which screen is the right screen or how to pull up the form you want, is fine. But this is not the place to expect to get training on tax return preparation for your clients.

[qbteachmt]

"When i enter something on this section on 179 deduction it states that section 179 deduction is not allowed on real property, not sure what the program is asking again"

You are supposed to know if Section 179 applies, if that is being taken or not, for the situation. You don't just fill in blanks because you see them. That isn't how the regulations apply.

[qbteachmt]

I realized these also are your Rental topics:

https://proconnect.intuit.com/community/proseries-tax-discussions/discussion/rental-property/00/1168...

https://proconnect.intuit.com/community/proseries-tax-discussions/discussion/filing-a-return-for-a-i...

And with all of that, it was recommended that you get some mentoring on how to handle this for taxes, because you seem to be trying to use parts of the tax code that you do not understand and have no training for. Are you not going to take that advice?