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Can anyone explain the figure of "Prior Depreciation" on a Home Office property in PTO? When I calculate and compare, the numbers are not lining up for me.

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Level 2
 
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Level 12

You mean your manual calculations don't match what the program shows?

Has the business percentage always been the same since it was "placed in service", or has the size (and therefore business percentage) varied?

If you give us the information, maybe we can help you figure it out.  The placed in service date, business percentage, total basis, land basis, etc.

 

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Level 2

Thank you so much!  (It's always looked generally correct - but in this case there is recapture so I dug further.)

Here's the situation:

Placed in service: 1/1/06

Total Cost: $1,243,255 (Land: $435,139/Building: $808,116)

Bus Pct: 15.38

To simplify things - I would love help just confirming the "Prior Depreciation" going into 2018 or 2019.

So grateful for any help!

 

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Level 12

By my calculations, 2006 would have had $3059 (or $3054*) of depreciation

Starting in 2007 it would be $3187 per year.

So in 2018, the "prior depreciation" would be $38,116 (or $38,111*).

In 2019, the "prior depreciation" would be $41,303 (or $41,298*).

 

How does that match with things?

 

Keep in mind that if the business percentage varied or if they ever used the Simplified Home Office deduction, those numbers would be different.

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Level 2

You have restored my faith in my own sanity.  Thank you!

I had similar numbers when I figured it manually - - but the Prior Depreciation on 2018 was coming through as $59,474.  I am confident that there had never been a higher percentage of the space used professionally, but have contacted the previous accountant to confirm.

 

Really appreciate this.

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Level 12

Do you  have access to older returns?  It is possible they were incorrectly taking too much depreciation.  For example, if they had not pulled out the land and were depreciating the full $1,243,255, that would be fairly close to the higher number.

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