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How do I Start up rental property after suspending depreciation for one year?

jaftax
Level 3

Last year I was told to put a date of disposition in the asset entry worksheet  with no selling price.  The rental property was not used at all in tax year 2017.  This stopped depreciation for tax year 2017.   Client is now starting up the rental property again On July 1  of 2018 .   I need to start depreciating  this property again, but only for six months of 2018 .  There  were also suspended losses that need to be carried forward.   I do not know how to input this data or how to start up the depreciation. Please help .

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TaxGuyBill
Level 14

You enter it as if it is a new property with a new Asset Entry Worksheet.  Use July 1st, 2018 as the "placed in service" date.

There is some debate whether you treat it as (1) a brand-new property re-starting the 27.5 year Recovery Period using the current Adjusted Basis (the prior depreciation lowered that Basis) or (2) 'pick up where you left off' in the Recovery Period using the original Basis.  From what I remember, I think my personal opinion was #1 was the correct method (but it has been a while since I researched it).

As for the Suspended Losses, scroll way down on the Schedule E worksheet (about 60% of the way down), and there is a place to enter the carryover Passive Losses (or Vacation Home losses, if that applies).

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TaxGuyBill
Level 14

You enter it as if it is a new property with a new Asset Entry Worksheet.  Use July 1st, 2018 as the "placed in service" date.

There is some debate whether you treat it as (1) a brand-new property re-starting the 27.5 year Recovery Period using the current Adjusted Basis (the prior depreciation lowered that Basis) or (2) 'pick up where you left off' in the Recovery Period using the original Basis.  From what I remember, I think my personal opinion was #1 was the correct method (but it has been a while since I researched it).

As for the Suspended Losses, scroll way down on the Schedule E worksheet (about 60% of the way down), and there is a place to enter the carryover Passive Losses (or Vacation Home losses, if that applies).

View solution in original post

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jaftax
Level 3
Thank you tax guy
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