All Things Tax

All Things Tax

Like the title says, from the filing process and tax questions to tax policy and reform, you can search and share All Things Tax here. This is the place to find answers to all your general questions that don't fall under the other categories. And just a reminder: questions about software or online filing should be posted in DIY Products.

Reply
Highlighted
Valued Pioneer
Posts: 4
Registered: ‎02-11-2018
Accepted Solution

3115 form

I just found out I needed to depreciate my rental property but didn't since Jan 2010.  Heard form 3115 is difficult to file.  can anyone explain it to me how to fill it our?  Do I file it with my 2017 tax or before?  Do I have to wait til I get a response from IRS before filing 2017?  I have been using H&R tax software for years and disappointment it didn't have me depreciate my property.  Is the form in the software?

Associate (Neighbor)
Posts: 220
Registered: ‎07-22-2014

Re: 3115 form

Hello, sskt, and welcome to the community.

 

Unfortunately, I have some bad news for you.  One of the few things the IRS will not accept on an amended return is claiming depreciation that was not on the original return.  They will accept amending depreciation in specific instances - mathematical errors, change in usage of the asset, incorrect date for the asset being placed in service, claiming the "special depreciation" allowance, and not adopting an accounting method.  Since the error was not claiming the allowable depreciation, and not one of the correctable errors, I'm afraid the IRS will deny your amendment.

 

I can't answer your question regarding whether the depreciation forms are in the software, since I'm not familiar with it - I am somewhat familiar with the online version (and, obviously, the in-office platform). 

 

Hope that helps a little - even though the answer isn't going to be a happy one.

 

-kurt

Valued Pioneer
Posts: 4
Registered: ‎02-11-2018

Re: 3115 form

Thank you for replying.  Is there anything else I can do?

Moderator
Posts: 74
Registered: ‎09-16-2014

Re: 3115 form

SsKT,

 

Hello! Welcome to the Community.

 

Unfortunately Form 3115 the catch up depreciation form is not available in the H&R Block online or software products. You are correct it is a doozy of a form to file! If you want to efile 2017 on your own, you can continue claiming the rental property without depreciating it. You can visit an H&R Block tax professional to attach Form 3115 to your amended 2017 tax return if you get it in before October 15th, 2018. That will catch up all your unclaimed depreciation. After that date, it won't be considered timely for 2017 and you'd have to wait to next year's taxes to catch up your depreciation. Then you can continue to depreciate the property in later years and beyond if you keep renting it.

 

Let us know if you need more guidance,

 

Lynn

Valued Pioneer
Posts: 4
Registered: ‎02-11-2018

Re: 3115 form

I didn't file 2017 yet, thought I had to send 3115 first.  Also why can't I start depreciating it now? 

Moderator
Posts: 74
Registered: ‎09-16-2014

Re: 3115 form

Form 3115 has to be attached to a timely filed income tax return, or within 6 months if a timely filed extension or tax return was filed by April. Not claiming depreciation when you should have is "adopting an improper method" which can only be fixed by asking the IRS for permission. The way you ask permission is to file Form 3115, which in this case would be an automatic acceptance of the request to change, so you can catch up all the missed depreciation on the tax return with Form 3115. 

 

Thanks!

-Lynn 

Valued Pioneer
Posts: 4
Registered: ‎02-11-2018

Re: 3115 form

What would you put down for dcn o part 1? I was told 8 but also I read online said I should put 7 because um claiming the whole missed amount on my 2017 return.
Pioneer
Posts: 2
Registered: ‎02-26-2018

Re: 3115 form

I have the exact same problem.

 

We have a unique situation.  We own 20 acres, which consists of our home and a rental home.  We also lease out the pasture (Schedule F) and have run some Airbnbs on the property all of which we capture on the appropriate forms.  The question has to do with whether we should have been depreciating the rental home, and if so -- how to determine the basis.

 

We are on one tax lot and have one mortgage.  The ability to have two houses on one lot was grandfathered in, and as such is a rarity.  The rental home was built in 1997 and we lived in it for some years.  It cost us roughly $78,000 (including the improvements).  The issue is that the home provides very little value to the overall value of the property.  In fact, it is more like a liability in that we have not been able to refinance our property in that we can't get comps/appraisals (we have tried numerous times throughout the last 1/2 dozen years and continually get rejected due to the two homes on the property).  While we do have a real market value for the property, which is divided into land and structures, the value of the structures is not further divided to take into account that there are two homes.  As well, the real market value allocated to structures is probably just the real value of our home and our shop.

 

In a nutshell, that was why we didn't depreciate from the start, and were given poor advise on the matter.  If at all possible, I would love to capture the depreciation this year, in that this year's taxes will be used when I do the FAFSA application for my daughter next year, I would like to take advantage of all of the potential tax breaks I can.

 

At the moment, I am overseas, otherwise, I'd head into my local H&R Block to start working on this form.  At the moment, I do not use H&R Block software (we've been using FreeTaxUSA), but would certainly do so, if it meant I could get help with this. We haven't filed our taxes yet, as we are waiting on a few 1009 returns to come in.

 

The other question related to this is how far back we go.  My husband and I think we started renting out the home possibly 14 years ago.  Back then, we did the tax forms by hand, made copies and filed them away somewhere safely.  I think the copies of the tax records we have now only go back to 2007.  We started filing electronically for the tax year 2010.

Moderator
Posts: 74
Registered: ‎09-16-2014

Re: 3115 form

Hi Sskt,

 

Not depreciating depreciable property is change number ("DCN") 7.

 

Thanks!

-Lynn

Pioneer
Posts: 2
Registered: ‎02-26-2018

Re: 3115 form

Can I do my own form 3115?  If so, can I still do my own online tax filing for this year?  If so, do I calculate depreciation for this year?  If so, when it asks for the year the item went into use, do I use the year I started renting?  For me, the problem is that I don't think I have copies of my old tax records.  I think in a box somewhere I've got them from 2007, but we started filing online in 2010, and I can see my schedule E for our rental then.