Foreign rental income depreciation problem

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misterno
Posts: 478
Joined: Sat Mar 08, 2014 7:55 am

Foreign rental income depreciation problem

Post by misterno » Wed Apr 11, 2018 8:59 am

So I inherited this property in 2017 due to loss of a family member.

I found a local appraisal company to appraise it so that I know the value at the time of the death converted into US dollars. This would help me utilize depreciation expense in my IRS tax return. Also it would help me calculate capital gains in case I sell the property in the future.

I am using taxact.com for tax filing and per the IRS rules I have to use MACRS straight depreciation of 40 years for depreciation purposes. But when I choose 40 years it is showing me 0 depreciation expense on this $90K property. If I choose any period other than 40, it is calculating a depreciation expense. I choose 25 years 39 or 27.5 years they all yielded depreciation expense but not 40 years period. Unfortunately, I can not choose anything other than 40 years because that is the IRS rule for foreign properties. See below for the link.

http://www.escapefromamerica.com/2011/0 ... ty-abroad/

I thought this was a threshold problem, maybe when 40 is chosen, the depreciation expense so low, IRS would not let me use it but then I looked at the difference between 39 and 40, it is very small ($849 vs $871). So it can not be threshold problem like there is a IRS minimum or something like that.

Any suggestions on what is going on here?

Sidney
Posts: 6694
Joined: Thu Mar 08, 2007 6:06 pm

Re: Foreign rental income depreciation problem

Post by Sidney » Wed Apr 11, 2018 9:28 am

When you look at Schedule E and Form 4562 are they both showing zero? Normally there is an individual asset schedule for each asset that summarizes to 4562 which summarizes to Schedule E. What shows up in your return?
I always wanted to be a procrastinator.

misterno
Posts: 478
Joined: Sat Mar 08, 2014 7:55 am

Re: Foreign rental income depreciation problem

Post by misterno » Wed Apr 11, 2018 9:34 am

Sidney wrote:
Wed Apr 11, 2018 9:28 am
When you look at Schedule E and Form 4562 are they both showing zero? Normally there is an individual asset schedule for each asset that summarizes to 4562 which summarizes to Schedule E. What shows up in your return?
If I choose 40 years it says

Your total depreciation for Inherited commercial property is $0. Your total amortization expense for Inherited commercial property is $0. Click Continue to review these entries.

If I choose 39 years it says

The total depreciation expense for Inherited commercial property is $871.

Sidney
Posts: 6694
Joined: Thu Mar 08, 2007 6:06 pm

Re: Foreign rental income depreciation problem

Post by Sidney » Wed Apr 11, 2018 9:37 am

Without seeing the form it is hard to know what is going on. Could be that the software is defective. Wouldn't be the first time and probably not the last.

I infer from your second post that you are seeing this on some online screen. What really matters is what is on the forms.
I always wanted to be a procrastinator.

misterno
Posts: 478
Joined: Sat Mar 08, 2014 7:55 am

Re: Foreign rental income depreciation problem

Post by misterno » Wed Apr 11, 2018 9:47 am

Sidney wrote:
Wed Apr 11, 2018 9:37 am
Without seeing the form it is hard to know what is going on. Could be that the software is defective. Wouldn't be the first time and probably not the last.

I infer from your second post that you are seeing this on some online screen. What really matters is what is on the forms.
I am trying to see if I can access to schedule E

misterno
Posts: 478
Joined: Sat Mar 08, 2014 7:55 am

Re: Foreign rental income depreciation problem

Post by misterno » Wed Apr 11, 2018 10:03 am

Sidney wrote:
Wed Apr 11, 2018 9:37 am
Without seeing the form it is hard to know what is going on. Could be that the software is defective. Wouldn't be the first time and probably not the last.

I infer from your second post that you are seeing this on some online screen. What really matters is what is on the forms.
Here is the Schedule E

Note that 2,118 is the rent I collected. but depreciation shows zero because I chose 40 years

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