To begin, please take the following path within the program:
- Federal Section
- Income
- Profit or Loss From a Business (Schedule C) OR Profit or Loss from Rentals and Royalties (Schedule E)
- Edit or Add Schedule C/E
- Depreciation > Assets
On the depreciation screen you will see the following entry options:
- Description of asset- This can be any description that helps you keep track of your asset.
- Date Placed in service- This will be the date that you began using the asset for business related purposes.
- Cost- The cost or Fair Market Value of the home
- Percentage of business use- The percentage that this asset is used for business related purposes. If you only use this property as a rental property then you will enter 100.
- Section 179 deduction- You will leave this box blank as it is not applicable to residential rental properties.
- Prior Year Special Depreciation- If you took the special depreciation allowance the first year you placed an item in service, enter the amount of special or "bonus" depreciation taken in this box.
- Accumulated depreciation- The total amount of depreciation taken on an asset to date. If this is your first year claiming depreciation, you will leave this box blank.
- Depreciation Method- MACRS 27.5% is the correct method for residential rental property
- Useful Life- The amount of years you anticipate using the asset for business related purpose.
- Mid Quarter Property- You will select this option if you placed your property in business use during the last three months of the tax year.
You can read more about depreciation in Publication 946