Rental Property

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Quest
Quest Member Newcomer

Does FreeTaxUSA calculate depreciation of the basis of a property, or must that be done manually then entered?

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  • CoryF
    CoryF FreeTaxUSA Agent
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    That is a great question, Quest.

    FreeTaxUSA is programmed to calculate all of your depreciation based on your inputs. Meaning you need to manually enter the asset information like in-service date, and cost basis. There will be questions regarding the type of asset that will translate into the depreciable life and deduction calculation. Then as you rollover your information into subsequent tax filing years, the asset cost basis and depreciation will follow and be calculated correctly on your Rental according to IRS code.

  • CoryF
    CoryF FreeTaxUSA Agent
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    That is a great followup question. Yes, by entering the proper in-service date for before the year that you are filing with FreeTaxUSA, the program will estimate the depreciation based on the proper depreciation life and years in service. One of the screens that will pop-up in the Rental Schedule E assets input will show the accumulated depreciation that should have been calculated on the property. You will then be prompted to manually enter that value or the value that you found on your previous tax return in the asset lists at the end of the printed tax return. The resulting current year depreciation will be calculated by FreeTaxUSA properly and moving forward til the end of the depreciable life.

    All tax preparation software programs should be following the same depreciation calculations according to the IRS codes.

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  • Quest
    Quest Member Newcomer
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    Followup question……if the asset was depreciated for a number of years using another tax program, will FreeTaxUSA be able to pick up and calculate the remaining depreciation. That is, does the program ask about previous accumulated depreciation and remaining life?

    Thank you