To begin, please take the following path:
- Federal Section
- Profit or Loss From a Business (Schedule C) OR Supplemental Income and Loss (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- You will leave this section blank as well.
- 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 year.
You can read more about depreciation in Publication 946