2006 & 2007 Schedule E Line 20 Depreciation shows 0 despite 2006 Form 4562 showing $2,808 of Depreciation deduction. Is there income limit to claiming Depr deduction?

Forum|Forum|1 year ago
April 3, 2025
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Son and Parents Bought home in 1999, Parents used it as Main Home. It was rented out for 12 months between July 06 and 2007. Home Sold in 2024. Son filed Sch E in 2006 & 2007 using Turbo Tax. Sch E Line 20 for both years shows Depreciation deduction as 0. Does this make sense, is there a reason why depreciation was limited to 0? It is concerning as I read that this depreciation should have been take if it could have been taken. Calculating basis for 2024 tax filing, figuring depreciation recapture, is it possible that depreciation was indeed 0 for 2006 and 2007? Does AGI limit have something to do with it? Please help, Thank You!

Vanessa A

No, even in 2006, Depreciation on a rental property was not limited to AGI. As to why the property shows depreciation of $0, it would be impossible to answer that at this point. It should have had some depreciation for the 12 months it was rented out. It is possible that for some reason you did not take it, whether it was due to an entry issue or a choice not to take it.

Either way, you will still have to recapture the depreciation as if it was taken even if it was not taken.

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The Good SonAuthor

Thank you Vanessa!

Are there any remedies to fix this issue at this point? Is filing Form 3115 an option for me for the 2024 return i.e. the year the home was sold, or is it too late? Is there a super simple explanation in layperson terms as to how Form 3115 could resolve the accidentally missed depreciation deductions for 12 months?

Any other simple way to resolve this?

Thank You!!

Mike9241

who (family, friends or others) rented the property and was fair rent paid? In a Tax Court case, parents rented the home at less than fair rental value. No rental expenses were allowed but the owners had to report the income. (Jackson, TC Memo 1999-226