I have been renting a property but have not claimed depreciation, what do I do?

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3 жыл бұрын

Today's topic is property depreciation and recapture. Enjoy!
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Пікірлер: 92

@SinanDM 3 жыл бұрын

So glad to see this video. I have exactly the same question. Glad to know that I still have options.

@HomeschoolShoppingChannel 2 ай бұрын

This is the only video I've seen on the topic that is dumbed down enough for me. Many thanks!

@MichaelWander 3 жыл бұрын

Great info! Thanks. I learned a lot.

@anthonyshelly4718 4 ай бұрын

Excellent information! Thank you!!

@Autofill1967 Жыл бұрын

this video was very helpful.

@brendensong8000 2 жыл бұрын

As always, thank you for explaining in detail! I always learn a lot!!!

@TheRealEstateCPA 2 жыл бұрын

Glad to hear it!

@user-we3fo8tu3u 5 ай бұрын

Definitely helpful!

@francescathrive203 6 ай бұрын

Thank you for this video

@sayilu 3 жыл бұрын

Great video- If I don’t have any cash flow positive property and all properties are passive income, then it seem not make sense to do it right now

@hisserver Жыл бұрын

Thanks for another amazing episode. Is it possible to utilize both cost segregation and bonus depreciation for a recently acquired property that was obtained through a 1031 exchange?

@freddykrueger8759 Жыл бұрын

Thanks😊

@robertbeckwith7820 Жыл бұрын

really appreciate the video. We transitioned our first home to a rental last year after owning as a our primary residence for 8 years. Hoping you can shed some light on the things I need to think about as it relates to capital gains. I know that I would need to sell within 3 years of converting to a rental to avoid all together. The property itself has gained approx $110K in value (65%) since we purchased. Rental is still cash flow positive by about $600 on top of the current 15 year mortgage. Need to answer the question of do we sell before capital gains comes in and takes approx $30K, or do we keep it for the long haul and let the home continue to build equity while bringing in a decent positive cash flow

@reinaellis9695 Жыл бұрын

This was so incredibly helpful!!! Can you tell me how a passive activity loss of $50,000 would affect the taxes on a sale of a $300K condo that was originally purchased for $150k in 2003 as a primary residence, and then transitioned into a rental beginning in 2007? Can we use that to reduce capital gains or depreciation recapture? We are going to end up paying so much in taxes and commissions on the sale that it hardly seems worth it.

@DaniloLopez Жыл бұрын

Excellent! the best explanations about taxes I've heard. Would you do tax returns for someone in Florida? It involves real estate properties, an irrevocable trust, and regular personal income tax. Thank you! Danilo Lopez, Miami FL

@Team8LA 2 ай бұрын

What happens if a person doesn't have a non passive income? The depreciation generated loss when filing tax, so what to do? Small rental condo, thank you!

@paulgibson8626 2 жыл бұрын

Thanks for the information. I didn't claim the deduction for fear of the recapture tax. Now I am educated and will claim and file the forms. 4/5/2022

@nofurtherwest3474 Жыл бұрын

I don't know why I find this so confusing. How can I understand it better?

@actmyage Жыл бұрын

2/5/23 Hey Brandon, how does taking De Min Safe Harbor deductions in a single year affect asset depreciation in the long run when selling a property? I know that taking deductions in a single year means you won't be adding those to your depreciation schedule, but can you speak to the strategy surrounding why this may be good or bad?

@mdnet78 11 ай бұрын

I had bought an international property in 2006 and my CPA at that time had used depreciation for 2/3 years - don’t remember the exact years or how many. I don’t have those tax returns any more. After that, never claimed depreciation. What are my options now?

@303Estates 4 ай бұрын

Awesome video!!! Question... does the IRS the depreciation you claimed over say 15 years? So would they know and add up every year for 15 years. Again, great video on this complicated subject!!

@yilei1051 Жыл бұрын

I searched Google a lot and this video finally answered my question! I have an additional question that I'm not sure if you know the answer to. If I'm partially renting my own home out (e.g. 30% rental), then after 5 years stop renting it out (100% personal use), and I sell the house at year 10. Would IRS assume I could have depreciated for 30% of normal depreciation value (1/27.5) through all 10 years, or would it assume that I would only depreciate it for 5 years?

@adamcassis9392 Жыл бұрын

Can you utilize form 3115 to take advantage of 100% bonus depreciation looking back?

@matthewgigantelli7334 11 ай бұрын

You touched on allowable depreciation. Is there an instance the IRS will calculate the depreciation you could have claimed using accelerated methods? Or, do they base it on straight line? I’m trying to understand section 1016

@JoshRichmanDesign 10 ай бұрын

What if you never want to sell the property? What's the best strategy?

@joannachiu4632 Жыл бұрын

The example of 37.5% tax bracket is based on the first year owning the property or the year of selling the property?

@metalrooves3651 5 ай бұрын

i heard that l must depreciate a rental property....i havent been...this is the best description of my situation..this guy is making it simple..

@faith8810 Жыл бұрын

I purchased my home in 2008 as my primary resident and I just started renting the property in 2022. How do I calculate the depreciation value of my property? Do I subtract the land value of 2008, or the land value of 2022 from the purchased price?

@skthelimit Жыл бұрын

Didn't depreciate for the same reason. Now I regret it but I will probably try to amend my past taxes. Thank you!

@harsimran784 2 ай бұрын

So depreciation should be on time or never go with depreciation?

@caribear007 2 жыл бұрын

Can I use Buildium for depreciation?

@user-mj4mw3fb2q 9 ай бұрын

A good topic would be, "I depreciate my building, but should I really depreciate things like appliances, etc" I'm starting to think, except for very high earners, for more moderate income investors those deductions are just kicking the can down the road.

@frank7007 2 ай бұрын

If no depreciation had been taken and only one year has passed the return may be corrected via amendment because the incorrect method had only been used for one year, so you can't amend tax return for missing depreciation for past three years. Only one year back is allowed.

@DMS20231 2 күн бұрын

Does one have to depreciate property that has been owned but not rented out? In other words, does the depreciation start when rental income starts or when the property is acquired? I bought a house a couple of years ago but have been sitting on it without renting it out (stupid, I know). I’ve basically been using it as a personal self-storage unit, lol.

@mcuthrell 3 жыл бұрын

Very well explained and was easy to understand. I always thought that Fed depreciation recapture was a flat 25%, I didn't know that it changed for the different types and when taking bonus depreciation. Also, it's worth adding that taking depreciation now, allows you to have more dollars available to put to work today, due to the reduction of purchasing power of those same dollars in the future (due to inflation).

@TheRealEstateCPA 3 жыл бұрын

Thanks for the comment and additional thoughts. I agree, depreciation allows you to capitalize on the Time Value of Money theory... I'd rather have tax savings in my pocket today and grow them over a period of time than not maximize depreciation and instead get the tax benefit spread out over time.

@frank7007 2 ай бұрын

TurboTax: Can you amend a tax return for missed depreciation? File an amended return: This only works if you didn't deduct depreciation on your rental assets for one year. Go back and amend the return to reflect the missed depreciation. Note: You can only go back one year to claim a possible refund for missed depreciation.

@sreddy4uaol 5 ай бұрын

Is depreciation recapture tax on a rental property on sale of real estate, subject to the capital gains minus the depreciation? I am selling a property with almost no gain from when I bought it. So there is very little or no recapture tax?

@travlntxn6737 Жыл бұрын

I was ignorant, rented a residential property for 14 years, from July 2008 through end of March 2022. Never claimed depreciation. Know rough market value of home at time put in rental as well as land value. Sold home April 2022. Straight line depreciation, if I use Tax records for that year would be $52,442 (adjusted for only 6 mos of 2008 and only 3 months of 2022). What is proper way to file this for my 2022 taxes. Have subscribed to your channel. Very impressed. Scott D

@orrd Жыл бұрын

You have to file form 3115, but it's a difficult and complicated form to complete. You should hire an EA or CPA to make that modification.

@aarongoldman8 Жыл бұрын

Thanks for the video. Any chance you could do a walk through video showing how to fill out the Form 3115 in this scenario, especially what verbiage to use on the supplemental statements?

@ziggidy808 Жыл бұрын

Any luck finding this?

@ripner111 Жыл бұрын

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@ryanwoolsey4983 3 ай бұрын

Hey Brandon, I have my rental property on the market right now and I've been crunching numbers to get an idea of what I will have to pay in Depreciation Recapture and Capital Gains taxes. I started renting my condo in 2011 and I'm pretty sure the various tax guys I hired didn't account for the depreciation I could have claimed each year. Unfortunately, I don't have my tax returns to confirm this. However, in 2017 I hired a good tax attorney who knows what he's doing and has been claiming the depreciation in my returns. I know I have to recapture the depreciation for the entire 13 years and 3 months I've held the property. My question is, do I have to go back and claim the depreciation for the first 5 years I may have missed, if I'm not sure whether or not it was claimed? Can I just recapture the depreciation for the entire time I held the property and not worry about those first 5 years since "I could have claimed it" and am required to recapture it anyway? Thanks for the help!

@paolodavid2108 3 ай бұрын

Excellent! I am in the same boat. My question is, am a W2, I do not have LLC or anything like that. Can I claim depreciation on my tax return?

@TheRealEstateCPA 3 ай бұрын

If you own depreciable property like rental real estate, you can typically claim depreciation on your tax return; no LLC required.

@metalrooves3651 5 ай бұрын

on farm ground l rent out ,i would imagine i cant depreciate it!!I hope not,the recapture will kill me,,its been 9 years already!!

@roottermariampillai2841 2 жыл бұрын

I thank you for the video. what I understand this video was If I subtract prize of the land from purchase prize of the house, Then multiply the amount by 3.6 % could be my yearly depreciation amount. Did I understand correctly? please help. Thank you

@orrd Жыл бұрын

Your tax software should take care of the calculation for you. 3.6% is an estimate. It's divided the building price divided by 27.5.

@Detoxingforlife 2 жыл бұрын

My understanding is that IRS doesn't always make you go back and recapture previous depreciation not taken. Is this true? Is it because they don't catch this all the time? Thank you fort our great videos

@marvinbrando722 2 ай бұрын

I think you got a great point. I am a bit confused, too. It lookalike IRS decides to approve or reject it. There are many people in that situation for going to "fake" Accountants and CPAs, with degrees but zero knowledge in fact.

@charleslaw4317 2 ай бұрын

Great video Bro! I'm a high school teacher and an Enrolled Agent and you would be a great high school teacher! When nrrd more teachers like you.

@TheRealEstateCPA 5 күн бұрын

I appreciate that!

@saulgvili5387 Ай бұрын

Hello and thank you for this presentation. Are you available for consultation regarding this subject?

@TheRealEstateCPA Ай бұрын

If you're interested in becoming a client, here is the link: www.therealestatecpa.com/youtube. If you would like the opportunity to book a strategy call, here is the link: www.taxsmartinvestors.com/insiders

@faonTherod Жыл бұрын

How do I get your contact information to work with issues that I have ?

@margiesamayoa3110 2 жыл бұрын

Hello, How can I get a personal assistance in how to claim depreciation and understanding how to file my taxes… I normally do mine using credit karma, I have my primary home and a rental house .. thank you

@orrd Жыл бұрын

Search for an EA or CPA in your area.

@pamilagrimes1588 2 жыл бұрын

Hi, what is the difference between recapture and capital gains when selling a rental property, or is it the same thing?

@gbuggy006 Жыл бұрын

Hi Pamela, Depreciation recapture is when you have to repay any depreciation amount you have deducted over the rental period. I haven’t ever experienced having to do this as I try to 1031 exchange the property instead of selling it outright. Capital gains is the the amount of money you receive above the original purchase price plus any capital improvements (ie new roof etc) you’ve made when you sell the property.

@shawn1869 Жыл бұрын

Hello, can we claim mortgage interest on both our rental property and personal property? In our situation that equals to about 23k just in interest. 750k principal for personal and 330k for our rental. Also i read that only 10k is deductible for property taxes, but is that for both properties total? Or is that 10k cap for each? This is ridiculously confusing and my tax guy cant seem to give me a straight answer...thanks in advance. You have really good content and subbed.

@braceyourselvesfortruth2492 Жыл бұрын

Shawn, it could be that the answer is a little complicated. The short answer is, YES for your rental property, and MAYBE for your primary residence, but read on. Passive activity income/losses are usually reported on Schedule E of your federal return. Mortgage interest, along with property taxes, insurance, management fees, repairs, maintenance, wages, other expenses, and depreciation are all deductible expenses from the rents and any other income your property generates. Also, there is no $10k limit on property taxes deducted on Sch E. Your primary residence is separate from all that. You must choose to itemize your deductions in order to be able to deduct mortgage interest and property taxes on your primary home. There is a $10k limit on any state/local property/sales/income tax. Homeowners insurance would not be an itemizable deduction (though claiming your home for a legitimate business use may allow this, just not on Schedule A). Of course if the standard deduction is higher than your itemizations, then that would probably be the better choice. Hope this is clear!

@tsdriver21 2 жыл бұрын

What if you've depreciated it, but incorrectly in the past? Can you use form 3115 to fix this? Thanks!

@David.Wiener Жыл бұрын

You can!

@derekbarr3111 Жыл бұрын

If i dont plan on selling my house how does the depreciation work as, for example, "writing the depreciation off every year while upgrading/repairing every 27.5 years," will there ever be a recapture of any sorts?

@TheRealEstateCPA Жыл бұрын

If you don't sell there generally isn't recapture

@USAlive596 9 ай бұрын

Are you still answering any questions regarding this topic?

@garylpphc 2 жыл бұрын

4/5/22- I was also thinking about not claiming depreciation for the first year that I own a rental property thinking that there will no recapture. Now I understand that it will be recapture regardless. This first year I only owned the property for a few months and I didn’t not receive and rental income. However the apartments were readily available. Can I claim partial year depreciation? If I can claim partial year depreciation, I have no rental income to offset for the few months that I’ve owned the property. How does this work? Does the partial depreciation offset my day to day jobs salary income?

@angeljoycompany6306 Жыл бұрын

Passive income (loss) can’t be claimed against your W2 income.

@g86jn Жыл бұрын

Lee Phillips says it has to be a short term rental (Airbnb) or you have to be a real estate pro to offset W2 stuff .

@TerrySmith-fo3qe Жыл бұрын

Hey Brandon, if I buy a foreclosure rental house which needs a lot of work for $42K, 10 years ago and I’ve been fixing it up and now my taxes indicate it’s worth $200K which number do I use for 1/27.5 depreciation for 2022?

@TheRealEstateCPA Жыл бұрын

Tom chiming in here. Assuming you spent the last 10 years fixing it up, you would generally take your original cost basis and then add the cost of the improvements you made over the years. That would be the amount that's depreciated. If you have further questions I'd recommend joining our free Facebook group at facebook.com/groups/taxsmartinvestors

@metalrooves3651 5 ай бұрын

i would bet this is one reason to sell these properties as a "CONTRACT FOR THE DEED"..they are rentals but dont look like it..and foreclosure is simpler..the "buyer" isnt getting a real deed until its paid off..i bet,but dont know that then no recapture would be needed....because there was no depreciation used..

@craigjovanovich6450 2 жыл бұрын

If one is a passive investor in a Real Estate Partnership, does any of this apply?

@Btouhy1 Жыл бұрын

no. you need to be a real estate profesional or own and run the short term rental

@vivianasantacruz8178 2 жыл бұрын

My sister and I bought a rental property and I was the only one reporting the rental property and taking depreciation, now we are going to sell the property and both will get 50% proceed each. What we should do ? Is better to report 100% proceed on the person who was taking depreciation?

@lilianah3505 Жыл бұрын

You should claim 50% basis, 50% depreciation. When you sell you will likely get 1099S with 50% proceeds, which the IRS also gets. I would see a tax professional to weigh your options (for both of you).

@brucetroutman9687 Жыл бұрын

I do not believe that you can go back and amend returns for missed depreciation. I believe that the only allowable option is to File Form 3115 with the tax return for the year in which the error is discovered and claim missed depreciation for prior years on Schedule E of the current year's tax return.

@sabirmd5942 18 күн бұрын

You cant do 3115

@metalrooves3651 5 ай бұрын

are hort tern rentals required to depreciate also? Isnt short-term different?

@belle9184 3 күн бұрын

I’m not an expert, but I think the answer is no. You still need to take depreciation.

@kshitiz06 2 жыл бұрын

Is there an income limit for claiming depreciation? I have a 9-to-5 job that earns me 170k a year. I recently purchased a rental house. Can I claim depreciation on it? Or does my 170k a year income prevents it? I googled it. And in almost all articles about depreciation says “if your income is 150k or above, you cannot claim rental loss”. This confused me. Articles are about depreciation. But when I read the part I am interested in, they switch the language to “rental loss”. Unless depreciation is considered part of rental loss, I don’t see why everyone would put that in an article about depreciation.

@delacruztaylor 2 жыл бұрын

AGI has to be above 150K, not your total income, like what is your actual tax liability after all the deductions etc.

@terrywnjoroge Жыл бұрын

Still unclear but I assume he still can claim bonus depreciation? Interested as I am in the sane boat

@orrd Жыл бұрын

You always still claim the depreciation regardless of your income. But the depreciation is just one of the factors that goes into the calculation of your total rental property gain or loss. Whether you can subtract that loss from your other income does depend on your income level. But you still always calculate the depreciation and report it on your tax forms and if you can't take it all that year, it rolls over indefinitely until you can.

@jeffytodd4261 2 жыл бұрын

What happens to the recapture if you die with the property

@orrd Жыл бұрын

It goes away and your heirs get the property with the new basis being its value at that time. Unless the laws on that change in the future.

@priestesslucy3299 2 жыл бұрын

Any theories as to _why_ the IRS mandates depreciation? Just seems unnecessary and not useful to force that on people by way of recapturing Depreciation even if it didn't happen.

@TheRealEstateCPA 2 жыл бұрын

Politicians :)