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Irs 2011 Tax Form

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Irs 2011 Tax Form

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Contact My Local Office in Missouri

Face-to-face Tax Help

IRS Taxpayer Assistance Centers (TACs) are your source for personal tax help when you believe your tax issue can only be handled face-to-face. No appointment is necessary.

Keep in mind, many questions can be resolved online without waiting in line. Through IRS.gov you can:
• Set up a payment plan.
• Get a transcript of your tax return.
• Make a payment.
• Check on your refund.
• Find answers to many of your tax questions.

We are now referring all requests for tax return preparation services to other available resources. You can take advantage of free tax preparation through Free File, Free File Fillable Forms or through a volunteer site in your community. To find the nearest volunteer site location or to get more information about Free File, go to the top of the page and enter “Free Tax Help” in the Search box.

If you have a tax account issues and feel that it requires talking with someone face-to-face, visit your local TAC.

Caution:  Many of our offices are located in Federal Office Buildings. These buildings may not allow visitors to bring in cell phones with camera capabilities.

Multilingual assistance is available in every office. Hours of operation are subject to change.

Before visiting your local office click on "Services Provided" in the chart below to see what services are available. Services are limited and not all services are available at every TAC office and may vary from site to site. You can get these services on a walk-in basis.

City Street Address Days/Hours of Service Telephone* 
Cape Girardeau   137 S. Broadview
Cape Girardeau, MO 63703  

Monday-Friday - 8:30 a.m.-4:30 p.m.
(Closed for lunch 12:30 p.m. - 1:30 p.m.)

 

Services Provided

(573) 334-1552  
Chesterfield   1122 Town and Country Commons
Chesterfield, MO 63017  

Monday-Friday - 8:30 a.m.-4:30 p.m.
(Closed for lunch 12:30 p.m. -1:30 p.m.)

 

Services Provided

(314) 612-4002  
Earth City  111 Corporate Office Dr.
Earth City, MO 63045  

Monday-Friday - 8:30 a.m.-4:30 p.m.


Services Provided

(314) 612-4002  
Independence    3730 S. Elizabeth Street
Independence, MO 64057  

Monday-Friday - 8:30 a.m.-4:30 p.m.
(Closed for lunch from 12:30 p.m.- 1:30 p.m.)

 

Services Provided

(816) 966-2840  
Jefferson City   3702 W. Truman Blvd.
Jefferson City, MO 65109  

Monday-Friday - 8:30 a.m.-4:30 p.m.
(Closed for lunch 1:00 p.m.-2:00 p.m.)

 

Services Provided

(573) 635-6827  
Joplin   402 S. Main St.
Joplin, MO 64801 

Monday-Friday - 8:30 a.m.-4:30 p.m.
(Closed for lunch 12:00 noon-1:00 p.m.)

 

Services Provided

(417) 889-9828  
Kansas City   Union Station
30 W. Pershing Rd.
Kansas City MO 64108

Monday-Friday - 8:30 a.m.-4:30 p.m.


Services Provided

(816) 966-2840  
Springfield   2937 S. Claremont Ave
Bldg A  
Springfield, MO 65804  

Monday-Friday - 8:30 a.m.-4:30 p.m.


Services Provided

(417) 889-9828  
St. Joseph   1211 North Belt Highway
St. Joseph, MO 64506  

Monday-Friday 8:30 a.m.-4:30 p.m.
(Closed for lunch 12:30 p.m. to 1:30 p.m.)

 

Services Provided

(816) 966-2840 
St. Louis   1222 Spruce St.
St. Louis, MO 63103  

Monday-Friday - 8:30 a.m.-4:30 p.m.

 

**This office will be open until 6:00 p.m. on 4/14 & 4/15**


Services Provided

(314) 612-4002  

* Note: The phone numbers in the chart above are not toll-free for all locations. When you call, you will reach a recorded business message with information about office hours, locations and services provided in that office. If face-to-face assistance is not a priority for you, you may also get help with IRS letters or resolve tax account issues by phone, toll free at 1-800-829-1040 (individuals) or 1-800-829-4933 (businesses).

For information on where to file your tax return please see Where to File Addresses

The Taxpayer Advocate Service: Call (314) 612-4610 in St. Louis,  or 1-877-777-4778 elsewhere, or see Publication 1546, The Taxpayer Advocate Service of the IRS.

For further information, see  Tax Topics 104

Partnerships

IRS and organizations all over the country are partnering to assist taxpayers. Through these partnerships, organizations are also achieving their own goals. These mutually beneficial partnerships are strengthening outreach efforts and bringing education and assistance to millions.

For more information about these programs for individuals and families, contact the Stakeholder Partnerships, Education and Communication Office at:

Internal Revenue Service
1222 Spruce St. MC 1022STL
St. Louis, MO 63103

Internal Revenue Service
2850 NE Independence Avenue, Suite 101
Lee's Summit, MO 64064-2327

Internal Revenue Service
2937 S. Claremont Ave., Bldg A
Springfield, MO 65804

For more information about these programs for businesses,   your local Stakeholder Liaison office establishes relationships with organizations representing small business and self-employed taxpayers. They provide information about the policies, practices and procedures the IRS uses to ensure compliance with the tax laws. To establish a relationship with us, use this list to find a contact in your state:

Stakeholder Liaison (SL) Phone Numbers for Organizations Representing Small Businesses and Self-employed Taxpayers.

Page Last Reviewed or Updated: 28-Mar-2014

The Irs 2011 Tax Form

Irs 2011 tax form 2. Irs 2011 tax form   Depreciation of Rental Property Table of Contents The BasicsWhat Rental Property Can Be Depreciated? When Does Depreciation Begin and End? Depreciation Methods Basis of Depreciable Property Claiming the Special Depreciation Allowance MACRS DepreciationDepreciation Systems Property Classes Under GDS Recovery Periods Under GDS Conventions Figuring Your Depreciation Deduction Figuring MACRS Depreciation Under ADS Claiming the Correct Amount of Depreciation You recover the cost of income producing property through yearly tax deductions. Irs 2011 tax form You do this by depreciating the property; that is, by deducting some of the cost each year on your tax return. Irs 2011 tax form Three factors determine how much depreciation you can deduct each year: (1) your basis in the property, (2) the recovery period for the property, and (3) the depreciation method used. Irs 2011 tax form You cannot simply deduct your mortgage or principal payments, or the cost of furniture, fixtures and equipment, as an expense. Irs 2011 tax form You can deduct depreciation only on the part of your property used for rental purposes. Irs 2011 tax form Depreciation reduces your basis for figuring gain or loss on a later sale or exchange. Irs 2011 tax form You may have to use Form 4562 to figure and report your depreciation. Irs 2011 tax form See Which Forms To Use in chapter 3. Irs 2011 tax form Also see Publication 946. Irs 2011 tax form Section 179 deduction. Irs 2011 tax form   The section 179 deduction is a means of recovering part or all of the cost of certain qualifying property in the year you place the property in service. Irs 2011 tax form This deduction is not allowed for property used in connection with residential rental property. Irs 2011 tax form See chapter 2 of Publication 946. Irs 2011 tax form Alternative minimum tax (AMT). Irs 2011 tax form   If you use accelerated depreciation, you may be subject to the AMT. Irs 2011 tax form Accelerated depreciation allows you to deduct more depreciation earlier in the recovery period than you could deduct using a straight line method (same deduction each year). Irs 2011 tax form   The prescribed depreciation methods for rental real estate are not accelerated, so the depreciation deduction is not adjusted for the AMT. Irs 2011 tax form However, accelerated methods are generally used for other property connected with rental activities (for example, appliances and wall-to-wall carpeting). Irs 2011 tax form   To find out if you are subject to the AMT, see the Instructions for Form 6251. Irs 2011 tax form The Basics The following section discusses the information you will need to have about the rental property and the decisions to be made before figuring your depreciation deduction. Irs 2011 tax form What Rental Property Can Be Depreciated? You can depreciate your property if it meets all the following requirements. Irs 2011 tax form You own the property. Irs 2011 tax form You use the property in your business or income-producing activity (such as rental property). Irs 2011 tax form The property has a determinable useful life. Irs 2011 tax form The property is expected to last more than one year. Irs 2011 tax form Property you own. Irs 2011 tax form   To claim depreciation, you usually must be the owner of the property. Irs 2011 tax form You are considered as owning property even if it is subject to a debt. Irs 2011 tax form Rented property. Irs 2011 tax form   Generally, if you pay rent for property, you cannot depreciate that property. Irs 2011 tax form Usually, only the owner can depreciate it. Irs 2011 tax form However, if you make permanent improvements to leased property, you may be able to depreciate the improvements. Irs 2011 tax form See Additions or improvements to property , later in this chapter, under Recovery Periods Under GDS. Irs 2011 tax form Cooperative apartments. Irs 2011 tax form   If you are a tenant-stockholder in a cooperative housing corporation and rent your cooperative apartment to others, you can deduct depreciation on your stock in the corporation. Irs 2011 tax form See chapter 4, Special Situations. Irs 2011 tax form Property having a determinable useful life. Irs 2011 tax form   To be depreciable, your property must have a determinable useful life. Irs 2011 tax form This means that it must be something that wears out, decays, gets used up, becomes obsolete, or loses its value from natural causes. Irs 2011 tax form What Rental Property Cannot Be Depreciated? Certain property cannot be depreciated. Irs 2011 tax form This includes land and certain excepted property. Irs 2011 tax form Land. Irs 2011 tax form   You cannot depreciate the cost of land because land generally does not wear out, become obsolete, or get used up. Irs 2011 tax form But if it does, the loss is accounted for upon disposition. Irs 2011 tax form The costs of clearing, grading, planting, and landscaping are usually all part of the cost of land and cannot be depreciated. Irs 2011 tax form   Although you cannot depreciate land, you can depreciate certain land preparation costs, such as landscaping costs, incurred in preparing land for business use. Irs 2011 tax form These costs must be so closely associated with other depreciable property that you can determine a life for them along with the life of the associated property. Irs 2011 tax form Example. Irs 2011 tax form You built a new house to use as a rental and paid for grading, clearing, seeding, and planting bushes and trees. Irs 2011 tax form Some of the bushes and trees were planted right next to the house, while others were planted around the outer border of the lot. Irs 2011 tax form If you replace the house, you would have to destroy the bushes and trees right next to it. Irs 2011 tax form These bushes and trees are closely associated with the house, so they have a determinable useful life. Irs 2011 tax form Therefore, you can depreciate them. Irs 2011 tax form Add your other land preparation costs to the basis of your land because they have no determinable life and you cannot depreciate them. Irs 2011 tax form Excepted property. Irs 2011 tax form   Even if the property meets all the requirements listed earlier under What Rental Property Can Be Depreciated , you cannot depreciate the following property. Irs 2011 tax form Property placed in service and disposed of (or taken out of business use) in the same year. Irs 2011 tax form Equipment used to build capital improvements. Irs 2011 tax form You must add otherwise allowable depreciation on the equipment during the period of construction to the basis of your improvements. Irs 2011 tax form For more information, see chapter 1 of Publication 946. Irs 2011 tax form When Does Depreciation Begin and End? You begin to depreciate your rental property when you place it in service for the production of income. Irs 2011 tax form You stop depreciating it either when you have fully recovered your cost or other basis, or when you retire it from service, whichever happens first. Irs 2011 tax form Placed in Service You place property in service in a rental activity when it is ready and available for a specific use in that activity. Irs 2011 tax form Even if you are not using the property, it is in service when it is ready and available for its specific use. Irs 2011 tax form Example 1. Irs 2011 tax form On November 22 of last year, you purchased a dishwasher for your rental property. Irs 2011 tax form The appliance was delivered on December 7, but was not installed and ready for use until January 3 of this year. Irs 2011 tax form Because the dishwasher was not ready for use last year, it is not considered placed in service until this year. Irs 2011 tax form If the appliance had been installed and ready for use when it was delivered in December of last year, it would have been considered placed in service in December, even if it was not actually used until this year. Irs 2011 tax form Example 2. Irs 2011 tax form On April 6, you purchased a house to use as residential rental property. Irs 2011 tax form You made extensive repairs to the house and had it ready for rent on July 5. Irs 2011 tax form You began to advertise the house for rent in July and actually rented it beginning September 1. Irs 2011 tax form The house is considered placed in service in July when it was ready and available for rent. Irs 2011 tax form You can begin to depreciate the house in July. Irs 2011 tax form Example 3. Irs 2011 tax form You moved from your home in July. Irs 2011 tax form During August and September you made several repairs to the house. Irs 2011 tax form On October 1, you listed the property for rent with a real estate company, which rented it on December 1. Irs 2011 tax form The property is considered placed in service on October 1, the date when it was available for rent. Irs 2011 tax form Conversion to business use. Irs 2011 tax form   If you place property in service in a personal activity, you cannot claim depreciation. Irs 2011 tax form However, if you change the property's use to business or the production of income, you can begin to depreciate it at the time of the change. Irs 2011 tax form You place the property in service for business or income-producing use on the date of the change. Irs 2011 tax form Example. Irs 2011 tax form You bought a house and used it as your personal home several years before you converted it to rental property. Irs 2011 tax form Although its specific use was personal and no depreciation was allowable, you placed the home in service when you began using it as your home. Irs 2011 tax form You can begin to claim depreciation in the year you converted it to rental property because at that time its use changed to the production of income. Irs 2011 tax form Idle Property Continue to claim a deduction for depreciation on property used in your rental activity even if it is temporarily idle (not in use). Irs 2011 tax form For example, if you must make repairs after a tenant moves out, you still depreciate the rental property during the time it is not available for rent. Irs 2011 tax form Cost or Other Basis Fully Recovered You must stop depreciating property when the total of your yearly depreciation deductions equals your cost or other basis of your property. Irs 2011 tax form For this purpose, your yearly depreciation deductions include any depreciation that you were allowed to claim, even if you did not claim it. Irs 2011 tax form See Basis of Depreciable Property , later. Irs 2011 tax form Retired From Service You stop depreciating property when you retire it from service, even if you have not fully recovered its cost or other basis. Irs 2011 tax form You retire property from service when you permanently withdraw it from use in a trade or business or from use in the production of income because of any of the following events. Irs 2011 tax form You sell or exchange the property. Irs 2011 tax form You convert the property to personal use. Irs 2011 tax form You abandon the property. Irs 2011 tax form The property is destroyed. Irs 2011 tax form Depreciation Methods Generally, you must use the Modified Accelerated Cost Recovery System (MACRS) to depreciate residential rental property placed in service after 1986. Irs 2011 tax form If you placed rental property in service before 1987, you are using one of the following methods. Irs 2011 tax form ACRS (Accelerated Cost Recovery System) for property placed in service after 1980 but before 1987. Irs 2011 tax form Straight line or declining balance method over the useful life of property placed in service before 1981. Irs 2011 tax form See MACRS Depreciation , later, for more information. Irs 2011 tax form Rental property placed in service before 2013. Irs 2011 tax form   Continue to use the same method of figuring depreciation that you used in the past. Irs 2011 tax form Use of real property changed. Irs 2011 tax form   Generally, you must use MACRS to depreciate real property that you acquired for personal use before 1987 and changed to business or income-producing use after 1986. Irs 2011 tax form This includes your residence that you changed to rental use. Irs 2011 tax form See Property Owned or Used in 1986 in Publication 946, chapter 1, for those situations in which MACRS is not allowed. Irs 2011 tax form Improvements made after 1986. Irs 2011 tax form   Treat an improvement made after 1986 to property you placed in service before 1987 as separate depreciable property. Irs 2011 tax form As a result, you can depreciate that improvement as separate property under MACRS if it is the type of property that otherwise qualifies for MACRS depreciation. Irs 2011 tax form For more information about improvements, see Additions or improvements to property , later in this chapter under Recovery Periods Under GDS. Irs 2011 tax form This publication discusses MACRS depreciation only. Irs 2011 tax form If you need information about depreciating property placed in service before 1987, see Publication 534. Irs 2011 tax form Basis of Depreciable Property The basis of property used in a rental activity is generally its adjusted basis when you place it in service in that activity. Irs 2011 tax form This is its cost or other basis when you acquired it, adjusted for certain items occurring before you place it in service in the rental activity. Irs 2011 tax form If you depreciate your property under MACRS, you may also have to reduce your basis by certain deductions and credits with respect to the property. Irs 2011 tax form Basis and adjusted basis are explained in the following discussions. Irs 2011 tax form If you used the property for personal purposes before changing it to rental use, its basis for depreciation is the lesser of its adjusted basis or its fair market value when you change it to rental use. Irs 2011 tax form See Basis of Property Changed to Rental Use in chapter 4. Irs 2011 tax form Cost Basis The basis of property you buy is usually its cost. Irs 2011 tax form The cost is the amount you pay for it in cash, in debt obligation, in other property, or in services. Irs 2011 tax form Your cost also includes amounts you pay for: Sales tax charged on the purchase (but see Exception next), Freight charges to obtain the property, and Installation and testing charges. Irs 2011 tax form Exception. Irs 2011 tax form   If you deducted state and local general sales taxes as an itemized deduction on Schedule A (Form 1040), do not include those sales taxes as part of your cost basis. Irs 2011 tax form Such taxes were deductible before 1987 and after 2003. Irs 2011 tax form Loans with low or no interest. Irs 2011 tax form   If you buy property on any time-payment plan that charges little or no interest, the basis of your property is your stated purchase price, less the amount considered to be unstated interest. Irs 2011 tax form See Unstated Interest and Original Issue Discount (OID) in Publication 537, Installment Sales. Irs 2011 tax form Real property. Irs 2011 tax form   If you buy real property, such as a building and land, certain fees and other expenses you pay are part of your cost basis in the property. Irs 2011 tax form Real estate taxes. Irs 2011 tax form   If you buy real property and agree to pay real estate taxes on it that were owed by the seller and the seller does not reimburse you, the taxes you pay are treated as part of your basis in the property. Irs 2011 tax form You cannot deduct them as taxes paid. Irs 2011 tax form   If you reimburse the seller for real estate taxes the seller paid for you, you can usually deduct that amount. Irs 2011 tax form Do not include that amount in your basis in the property. Irs 2011 tax form Settlement fees and other costs. Irs 2011 tax form   The following settlement fees and closing costs for buying the property are part of your basis in the property. Irs 2011 tax form Abstract fees. Irs 2011 tax form Charges for installing utility services. Irs 2011 tax form Legal fees. Irs 2011 tax form Recording fees. Irs 2011 tax form Surveys. Irs 2011 tax form Transfer taxes. Irs 2011 tax form Title insurance. Irs 2011 tax form Any amounts the seller owes that you agree to pay, such as back taxes or interest, recording or mortgage fees, charges for improvements or repairs, and sales commissions. Irs 2011 tax form   The following are settlement fees and closing costs you cannot include in your basis in the property. Irs 2011 tax form Fire insurance premiums. Irs 2011 tax form Rent or other charges relating to occupancy of the property before closing. Irs 2011 tax form Charges connected with getting or refinancing a loan, such as: Points (discount points, loan origination fees), Mortgage insurance premiums, Loan assumption fees, Cost of a credit report, and Fees for an appraisal required by a lender. Irs 2011 tax form   Also, do not include amounts placed in escrow for the future payment of items such as taxes and insurance. Irs 2011 tax form Assumption of a mortgage. Irs 2011 tax form   If you buy property and become liable for an existing mortgage on the property, your basis is the amount you pay for the property plus the amount remaining to be paid on the mortgage. Irs 2011 tax form Example. Irs 2011 tax form You buy a building for $60,000 cash and assume a mortgage of $240,000 on it. Irs 2011 tax form Your basis is $300,000. Irs 2011 tax form Separating cost of land and buildings. Irs 2011 tax form   If you buy buildings and your cost includes the cost of the land on which they stand, you must divide the cost between the land and the buildings to figure the basis for depreciation of the buildings. Irs 2011 tax form The part of the cost that you allocate to each asset is the ratio of the fair market value of that asset to the fair market value of the whole property at the time you buy it. Irs 2011 tax form   If you are not certain of the fair market values of the land and the buildings, you can divide the cost between them based on their assessed values for real estate tax purposes. Irs 2011 tax form Example. Irs 2011 tax form You buy a house and land for $200,000. Irs 2011 tax form The purchase contract does not specify how much of the purchase price is for the house and how much is for the land. Irs 2011 tax form The latest real estate tax assessment on the property was based on an assessed value of $160,000, of which $136,000 was for the house and $24,000 was for the land. Irs 2011 tax form You can allocate 85% ($136,000 ÷ $160,000) of the purchase price to the house and 15% ($24,000 ÷ $160,000) of the purchase price to the land. Irs 2011 tax form Your basis in the house is $170,000 (85% of $200,000) and your basis in the land is $30,000 (15% of $200,000). Irs 2011 tax form Basis Other Than Cost You cannot use cost as a basis for property that you received: In return for services you performed; In an exchange for other property; As a gift; From your spouse, or from your former spouse as the result of a divorce; or As an inheritance. Irs 2011 tax form If you received property in one of these ways, see Publication 551 for information on how to figure your basis. Irs 2011 tax form Adjusted Basis To figure your property's basis for depreciation, you may have to make certain adjustments (increases and decreases) to the basis of the property for events occurring between the time you acquired the property and the time you placed it in service for business or the production of income. Irs 2011 tax form The result of these adjustments to the basis is the adjusted basis. Irs 2011 tax form Increases to basis. Irs 2011 tax form   You must increase the basis of any property by the cost of all items properly added to a capital account. Irs 2011 tax form These include the following. Irs 2011 tax form The cost of any additions or improvements made before placing your property into service as a rental that have a useful life of more than 1 year. Irs 2011 tax form Amounts spent after a casualty to restore the damaged property. Irs 2011 tax form The cost of extending utility service lines to the property. Irs 2011 tax form Legal fees, such as the cost of defending and perfecting title, or settling zoning issues. Irs 2011 tax form Additions or improvements. Irs 2011 tax form   Add to the basis of your property the amount an addition or improvement actually cost you, including any amount you borrowed to make the addition or improvement. Irs 2011 tax form This includes all direct costs, such as material and labor, but does not include your own labor. Irs 2011 tax form It also includes all expenses related to the addition or improvement. Irs 2011 tax form   For example, if you had an architect draw up plans for remodeling your property, the architect's fee is a part of the cost of the remodeling. Irs 2011 tax form Or, if you had your lot surveyed to put up a fence, the cost of the survey is a part of the cost of the fence. Irs 2011 tax form   Keep separate accounts for depreciable additions or improvements made after you place the property in service in your rental activity. Irs 2011 tax form For information on depreciating additions or improvements, see Additions or improvements to property , later in this chapter, under Recovery Periods Under GDS. Irs 2011 tax form    The cost of landscaping improvements is usually treated as an addition to the basis of the land, which is not depreciable. Irs 2011 tax form However, see What Rental Property Cannot Be Depreciated, earlier. Irs 2011 tax form Assessments for local improvements. Irs 2011 tax form   Assessments for items which tend to increase the value of property, such as streets and sidewalks, must be added to the basis of the property. Irs 2011 tax form For example, if your city installs curbing on the street in front of your house, and assesses you and your neighbors for its cost, you must add the assessment to the basis of your property. Irs 2011 tax form Also add the cost of legal fees paid to obtain a decrease in an assessment levied against property to pay for local improvements. Irs 2011 tax form You cannot deduct these items as taxes or depreciate them. Irs 2011 tax form    However, you can deduct as taxes, charges or assessments for maintenance, repairs, or interest charges related to the improvements. Irs 2011 tax form Do not add them to your basis in the property. Irs 2011 tax form Deducting vs. Irs 2011 tax form capitalizing costs. Irs 2011 tax form   Do not add to your basis costs you can deduct as current expenses. Irs 2011 tax form However, there are certain costs you can choose either to deduct or to capitalize. Irs 2011 tax form If you capitalize these costs, include them in your basis. Irs 2011 tax form If you deduct them, do not include them in your basis. Irs 2011 tax form   The costs you may choose to deduct or capitalize include carrying charges, such as interest and taxes, that you must pay to own property. Irs 2011 tax form   For more information about deducting or capitalizing costs and how to make the election, see Carrying Charges in Publication 535, chapter 7. Irs 2011 tax form Decreases to basis. Irs 2011 tax form   You must decrease the basis of your property by any items that represent a return of your cost. Irs 2011 tax form These include the following. Irs 2011 tax form Insurance or other payment you receive as the result of a casualty or theft loss. Irs 2011 tax form Casualty loss not covered by insurance for which you took a deduction. Irs 2011 tax form Amount(s) you receive for granting an easement. Irs 2011 tax form Residential energy credits you were allowed before 1986, or after 2005, if you added the cost of the energy items to the basis of your home. Irs 2011 tax form Exclusion from income of subsidies for energy conservation measures. Irs 2011 tax form Special depreciation allowance claimed on qualified property. Irs 2011 tax form Depreciation you deducted, or could have deducted, on your tax returns under the method of depreciation you chose. Irs 2011 tax form If you did not deduct enough or deducted too much in any year, see Depreciation under Decreases to Basis in Publication 551. Irs 2011 tax form   If your rental property was previously used as your main home, you must also decrease the basis by the following. Irs 2011 tax form Gain you postponed from the sale of your main home before May 7, 1997, if the replacement home was converted to your rental property. Irs 2011 tax form District of Columbia first-time homebuyer credit allowed on the purchase of your main home after August 4, 1997 and before January 1, 2012. Irs 2011 tax form Amount of qualified principal residence indebtedness discharged on or after January 1, 2007. Irs 2011 tax form Claiming the Special Depreciation Allowance For 2013, your residential rental property may qualify for a special depreciation allowance. Irs 2011 tax form This allowance is figured before you figure your regular depreciation deduction. Irs 2011 tax form See Publication 946, chapter 3, for details. Irs 2011 tax form Also see the Instructions for Form 4562, Line 14. Irs 2011 tax form If you qualify for, but choose not to take, a special depreciation allowance, you must attach a statement to your return. Irs 2011 tax form The details of this election are in Publication 946, chapter 3, and the Instructions for Form 4562, Line 14. Irs 2011 tax form MACRS Depreciation Most business and investment property placed in service after 1986 is depreciated using MACRS. Irs 2011 tax form This section explains how to determine which MACRS depreciation system applies to your property. Irs 2011 tax form It also discusses other information you need to know before you can figure depreciation under MACRS. Irs 2011 tax form This information includes the property's: Recovery class, Applicable recovery period, Convention, Placed-in-service date, Basis for depreciation, and Depreciation method. Irs 2011 tax form Depreciation Systems MACRS consists of two systems that determine how you depreciate your property—the General Depreciation System (GDS) and the Alternative Depreciation System (ADS). Irs 2011 tax form You must use GDS unless you are specifically required by law to use ADS or you elect to use ADS. Irs 2011 tax form Excluded Property You cannot use MACRS for certain personal property (such as furniture or appliances) placed in service in your rental property in 2013 if it had been previously placed in service before 1987 when MACRS became effective. Irs 2011 tax form In most cases, personal property is excluded from MACRS if you (or a person related to you) owned or used it in 1986 or if your tenant is a person (or someone related to the person) who owned or used it in 1986. Irs 2011 tax form However, the property is not excluded if your 2013 deduction under MACRS (using a half-year convention) is less than the deduction you would have under ACRS. Irs 2011 tax form For more information, see What Method Can You Use To Depreciate Your Property? in Publication 946, chapter 1. Irs 2011 tax form Electing ADS If you choose, you can use the ADS method for most property. Irs 2011 tax form Under ADS, you use the straight line method of depreciation. Irs 2011 tax form The election of ADS for one item in a class of property generally applies to all property in that class that is placed in service during the tax year of the election. Irs 2011 tax form However, the election applies on a property-by-property basis for residential rental property and nonresidential real property. Irs 2011 tax form If you choose to use ADS for your residential rental property, the election must be made in the first year the property is placed in service. Irs 2011 tax form Once you make this election, you can never revoke it. Irs 2011 tax form For property placed in service during 2013, you make the election to use ADS by entering the depreciation on Form 4562, Part III, Section C, line 20c. Irs 2011 tax form Property Classes Under GDS Each item of property that can be depreciated under MACRS is assigned to a property class, determined by its class life. Irs 2011 tax form The property class generally determines the depreciation method, recovery period, and convention. Irs 2011 tax form The property classes under GDS are: 3-year property, 5-year property, 7-year property, 10-year property, 15-year property, 20-year property, Nonresidential real property, and Residential rental property. Irs 2011 tax form Under MACRS, property that you placed in service during 2013 in your rental activities generally falls into one of the following classes. Irs 2011 tax form 5-year property. Irs 2011 tax form This class includes computers and peripheral equipment, office machinery (typewriters, calculators, copiers, etc. Irs 2011 tax form ), automobiles, and light trucks. Irs 2011 tax form This class also includes appliances, carpeting, furniture, etc. Irs 2011 tax form , used in a residential rental real estate activity. Irs 2011 tax form Depreciation on automobiles, other property used for transportation, computers and related peripheral equipment, and property of a type generally used for entertainment, recreation, or amusement is limited. Irs 2011 tax form See chapter 5 of Publication 946. Irs 2011 tax form 7-year property. Irs 2011 tax form This class includes office furniture and equipment (desks, file cabinets, etc. Irs 2011 tax form ). Irs 2011 tax form This class also includes any property that does not have a class life and that has not been designated by law as being in any other class. Irs 2011 tax form 15-year property. Irs 2011 tax form This class includes roads, fences, and shrubbery (if depreciable). Irs 2011 tax form Residential rental property. Irs 2011 tax form This class includes any real property that is a rental building or structure (including a mobile home) for which 80% or more of the gross rental income for the tax year is from dwelling units. Irs 2011 tax form It does not include a unit in a hotel, motel, inn, or other establishment where more than half of the units are used on a transient basis. Irs 2011 tax form If you live in any part of the building or structure, the gross rental income includes the fair rental value of the part you live in. Irs 2011 tax form The other property classes do not generally apply to property used in rental activities. Irs 2011 tax form These classes are not discussed in this publication. Irs 2011 tax form See Publication 946 for more information. Irs 2011 tax form Recovery Periods Under GDS The recovery period of property is the number of years over which you recover its cost or other basis. Irs 2011 tax form The recovery periods are generally longer under ADS than GDS. Irs 2011 tax form The recovery period of property depends on its property class. Irs 2011 tax form Under GDS, the recovery period of an asset is generally the same as its property class. Irs 2011 tax form Class lives and recovery periods for most assets are listed in Appendix B of Publication 946. Irs 2011 tax form See Table 2-1 for recovery periods of property commonly used in residential rental activities. Irs 2011 tax form Qualified Indian reservation property. Irs 2011 tax form   Shorter recovery periods are provided under MACRS for qualified Indian reservation property placed in service on Indian reservations. Irs 2011 tax form For more information, see chapter 4 of Publication 946. Irs 2011 tax form Additions or improvements to property. Irs 2011 tax form   Treat additions or improvements you make to your depreciable rental property as separate property items for depreciation purposes. Irs 2011 tax form   The property class and recovery period of the addition or improvement is the one that would apply to the original property if you had placed it in service at the same time as the addition or improvement. Irs 2011 tax form   The recovery period for an addition or improvement to property begins on the later of: The date the addition or improvement is placed in service, or The date the property to which the addition or improvement was made is placed in service. Irs 2011 tax form Example. Irs 2011 tax form You own a residential rental house that you have been renting since 1986 and depreciating under ACRS. Irs 2011 tax form You built an addition onto the house and placed it in service in 2013. Irs 2011 tax form You must use MACRS for the addition. Irs 2011 tax form Under GDS, the addition is depreciated as residential rental property over 27. Irs 2011 tax form 5 years. Irs 2011 tax form Table 2-1. Irs 2011 tax form MACRS Recovery Periods for Property Used in Rental Activities   MACRS Recovery Period   Type of Property General Depreciation System Alternative Depreciation System   Computers and their peripheral equipment 5 years 5 years   Office machinery, such as: Typewriters Calculators Copiers 5 years 6 years   Automobiles 5 years 5 years   Light trucks 5 years 5 years   Appliances, such as: Stoves Refrigerators 5 years 9 years   Carpets 5 years 9 years   Furniture used in rental property 5 years 9 years   Office furniture and equipment, such as: Desks Files 7 years 10 years   Any property that does not have a class life and that has not been designated by law as being in any other class 7 years 12 years   Roads 15 years 20 years   Shrubbery 15 years 20 years   Fences 15 years 20 years   Residential rental property (buildings or structures) and structural components such as furnaces, waterpipes, venting, etc. Irs 2011 tax form 27. Irs 2011 tax form 5 years 40 years   Additions and improvements, such as a new roof The same recovery period as that of the property to which the addition or improvement is made, determined as if the property were placed in service at the same time as the addition or improvement. Irs 2011 tax form   Conventions A convention is a method established under MACRS to set the beginning and end of the recovery period. Irs 2011 tax form The convention you use determines the number of months for which you can claim depreciation in the year you place property in service and in the year you dispose of the property. Irs 2011 tax form Mid-month convention. Irs 2011 tax form    A mid-month convention is used for all residential rental property and nonresidential real property. Irs 2011 tax form Under this convention, you treat all property placed in service, or disposed of, during any month as placed in service, or disposed of, at the midpoint of that month. Irs 2011 tax form Mid-quarter convention. Irs 2011 tax form   A mid-quarter convention must be used if the mid-month convention does not apply and the total depreciable basis of MACRS property placed in service in the last 3 months of a tax year (excluding nonresidential real property, residential rental property, and property placed in service and disposed of in the same year) is more than 40% of the total basis of all such property you place in service during the year. Irs 2011 tax form   Under this convention, you treat all property placed in service, or disposed of, during any quarter of a tax year as placed in service, or disposed of, at the midpoint of the quarter. Irs 2011 tax form Example. Irs 2011 tax form During the tax year, Tom Martin purchased the following items to use in his rental property. Irs 2011 tax form He elects not to claim the special depreciation allowance discussed earlier. Irs 2011 tax form A dishwasher for $400 that he placed in service in January. Irs 2011 tax form Used furniture for $100 that he placed in service in September. Irs 2011 tax form A refrigerator for $800 that he placed in service in October. Irs 2011 tax form Tom uses the calendar year as his tax year. Irs 2011 tax form The total basis of all property placed in service that year is $1,300. Irs 2011 tax form The $800 basis of the refrigerator placed in service during the last 3 months of his tax year exceeds $520 (40% × $1,300). Irs 2011 tax form Tom must use the mid-quarter convention instead of the half-year convention for all three items. Irs 2011 tax form Half-year convention. Irs 2011 tax form    The half-year convention is used if neither the mid-quarter convention nor the mid-month convention applies. Irs 2011 tax form Under this convention, you treat all property placed in service, or disposed of, during a tax year as placed in service, or disposed of, at the midpoint of that tax year. Irs 2011 tax form   If this convention applies, you deduct a half year of depreciation for the first year and the last year that you depreciate the property. Irs 2011 tax form You deduct a full year of depreciation for any other year during the recovery period. Irs 2011 tax form Figuring Your Depreciation Deduction You can figure your MACRS depreciation deduction in one of two ways. Irs 2011 tax form The deduction is substantially the same both ways. Irs 2011 tax form You can either: Actually compute the deduction using the depreciation method and convention that apply over the recovery period of the property, or Use the percentage from the MACRS percentage tables. Irs 2011 tax form In this publication we will use the percentage tables. Irs 2011 tax form For instructions on how to compute the deduction, see chapter 4 of Publication 946. Irs 2011 tax form Residential rental property. Irs 2011 tax form   You must use the straight line method and a mid-month convention for residential rental property. Irs 2011 tax form In the first year that you claim depreciation for residential rental property, you can claim depreciation only for the number of months the property is in use, and you must use the mid-month convention (explained under Conventions , earlier). Irs 2011 tax form 5-, 7-, or 15-year property. Irs 2011 tax form   For property in the 5- or 7-year class, use the 200% declining balance method and a half-year convention. Irs 2011 tax form However, in limited cases you must use the mid-quarter convention, if it applies. Irs 2011 tax form For property in the 15-year class, use the 150% declining balance method and a half-year convention. Irs 2011 tax form   You can also choose to use the 150% declining balance method for property in the 5- or 7-year class. Irs 2011 tax form The choice to use the 150% method for one item in a class of property applies to all property in that class that is placed in service during the tax year of the election. Irs 2011 tax form You make this election on Form 4562. Irs 2011 tax form In Part III, column (f), enter “150 DB. Irs 2011 tax form ” Once you make this election, you cannot change to another method. Irs 2011 tax form   If you use either the 200% or 150% declining balance method, you figure your deduction using the straight line method in the first tax year that the straight line method gives you an equal or larger deduction. Irs 2011 tax form   You can also choose to use the straight line method with a half-year or mid-quarter convention for 5-, 7-, or 15-year property. Irs 2011 tax form The choice to use the straight line method for one item in a class of property applies to all property in that class that is placed in service during the tax year of the election. Irs 2011 tax form You elect the straight line method on Form 4562. Irs 2011 tax form In Part III, column (f), enter “S/L. Irs 2011 tax form ” Once you make this election, you cannot change to another method. Irs 2011 tax form MACRS Percentage Tables You can use the percentages in Table 2-2, earlier, to compute annual depreciation under MACRS. Irs 2011 tax form The tables show the percentages for the first few years or until the change to the straight line method is made. Irs 2011 tax form See Appendix A of Publication 946 for complete tables. Irs 2011 tax form The percentages in Tables 2-2a, 2-2b, and 2-2c make the change from declining balance to straight line in the year that straight line will give a larger deduction. Irs 2011 tax form If you elect to use the straight line method for 5-, 7-, or 15-year property, or the 150% declining balance method for 5- or 7-year property, use the tables in Appendix A of Publication 946. Irs 2011 tax form How to use the percentage tables. Irs 2011 tax form   You must apply the table rates to your property's unadjusted basis (defined below) each year of the recovery period. Irs 2011 tax form   Once you begin using a percentage table to figure depreciation, you must continue to use it for the entire recovery period unless there is an adjustment to the basis of your property for a reason other than: Depreciation allowed or allowable, or An addition or improvement that is depreciated as a separate item of property. Irs 2011 tax form   If there is an adjustment for any reason other than (1) or (2), for example, because of a deductible casualty loss, you can no longer use the table. Irs 2011 tax form For the year of the adjustment and for the remaining recovery period, figure depreciation using the property's adjusted basis at the end of the year and the appropriate depreciation method, as explained earlier under Figuring Your Depreciation Deduction . Irs 2011 tax form See Figuring the Deduction Without Using the Tables in Publication 946, chapter 4. Irs 2011 tax form Unadjusted basis. Irs 2011 tax form   This is the same basis you would use to figure gain on a sale (see Basis of Depreciable Property , earlier), but without reducing your original basis by any MACRS depreciation taken in earlier years. Irs 2011 tax form   However, you do reduce your original basis by other amounts claimed on the property, including: Any amortization, Any section 179 deduction, and Any special depreciation allowance. Irs 2011 tax form For more information, see chapter 4 of Publication 946. Irs 2011 tax form Please click here for the text description of the image. Irs 2011 tax form Table 2-2 Tables 2-2a, 2-2b, and 2-2c. Irs 2011 tax form   The percentages in these tables take into account the half-year and mid-quarter conventions. Irs 2011 tax form Use Table 2-2a for 5-year property, Table 2-2b for 7-year property, and Table 2-2c for 15-year property. Irs 2011 tax form Use the percentage in the second column (half-year convention) unless you are required to use the mid-quarter convention (explained earlier). Irs 2011 tax form If you must use the mid-quarter convention, use the column that corresponds to the calendar year quarter in which you placed the property in service. Irs 2011 tax form Example 1. Irs 2011 tax form You purchased a stove and refrigerator and placed them in service in June. Irs 2011 tax form Your basis in the stove is $600 and your basis in the refrigerator is $1,000. Irs 2011 tax form Both are 5-year property. Irs 2011 tax form Using the half-year convention column in Table 2-2a, the depreciation percentage for Year 1 is 20%. Irs 2011 tax form For that year your depreciation deduction is $120 ($600 × . Irs 2011 tax form 20) for the stove and $200 ($1,000 × . Irs 2011 tax form 20) for the refrigerator. Irs 2011 tax form For Year 2, the depreciation percentage is 32%. Irs 2011 tax form That year's depreciation deduction will be $192 ($600 × . Irs 2011 tax form 32) for the stove and $320 ($1,000 × . Irs 2011 tax form 32) for the refrigerator. Irs 2011 tax form Example 2. Irs 2011 tax form Assume the same facts as in Example 1, except you buy the refrigerator in October instead of June. Irs 2011 tax form Since the refrigerator was placed in service in the last 3 months of the tax year, and its basis ($1,000) is more than 40% of the total basis of all property placed in service during the year ($1,600 × . Irs 2011 tax form 40 = $640), you are required to use the mid-quarter convention to figure depreciation on both the stove and refrigerator. Irs 2011 tax form Because you placed the refrigerator in service in October, you use the fourth quarter column of Table 2-2a and find the depreciation percentage for Year 1 is 5%. Irs 2011 tax form Your depreciation deduction for the refrigerator is $50 ($1,000 x . Irs 2011 tax form 05). Irs 2011 tax form Because you placed the stove in service in June, you use the second quarter column of Table 2-2a and find the depreciation percentage for Year 1 is 25%. Irs 2011 tax form For that year, your depreciation deduction for the stove is $150 ($600 x . Irs 2011 tax form 25). Irs 2011 tax form Table 2-2d. Irs 2011 tax form    Use this table when you are using the GDS 27. Irs 2011 tax form 5 year option for residential rental property. Irs 2011 tax form Find the row for the month that you placed the property in service. Irs 2011 tax form Use the percentages listed for that month to figure your depreciation deduction. Irs 2011 tax form The mid-month convention is taken into account in the percentages shown in the table. Irs 2011 tax form Continue to use the same row (month) under the column for the appropriate year. Irs 2011 tax form Example. Irs 2011 tax form You purchased a single family rental house for $185,000 and placed it in service on February 8. Irs 2011 tax form The sales contract showed that the building cost $160,000 and the land cost $25,000. Irs 2011 tax form Your basis for depreciation is its original cost, $160,000. Irs 2011 tax form This is the first year of service for your residential rental property and you decide to use GDS which has a recovery period of 27. Irs 2011 tax form 5 years. Irs 2011 tax form Using Table 2-2d, you find that the percentage for property placed in service in February of Year 1 is 3. Irs 2011 tax form 182%. Irs 2011 tax form That year's depreciation deduction is $5,091 ($160,000 x . Irs 2011 tax form 03182). Irs 2011 tax form Figuring MACRS Depreciation Under ADS Table 2–1, earlier, shows the ADS recovery periods for property used in rental activities. Irs 2011 tax form See Appendix B in Publication 946 for other property. Irs 2011 tax form If your property is not listed in Appendix B, it is considered to have no class life. Irs 2011 tax form Under ADS, personal property with no class life is depreciated using a recovery period of 12 years. Irs 2011 tax form Use the mid-month convention for residential rental property and nonresidential real property. Irs 2011 tax form For all other property, use the half-year or mid-quarter convention, as appropriate. Irs 2011 tax form See Publication 946 for ADS depreciation tables. Irs 2011 tax form Claiming the Correct Amount of Depreciation You should claim the correct amount of depreciation each tax year. Irs 2011 tax form If you did not claim all the depreciation you were entitled to deduct, you must still reduce your basis in the property by the full amount of depreciation that you could have deducted. Irs 2011 tax form For more information, see Depreciation under Decreases to Basis in Publication 551. Irs 2011 tax form If you deducted an incorrect amount of depreciation for property in any year, you may be able to make a correction by filing Form 1040X, Amended U. Irs 2011 tax form S. Irs 2011 tax form Individual Income Tax Return. Irs 2011 tax form If you are not allowed to make the correction on an amended return, you can change your accounting method to claim the correct amount of depreciation. Irs 2011 tax form Filing an amended return. Irs 2011 tax form   You can file an amended return to correct the amount of depreciation claimed for any property in any of the following situations. Irs 2011 tax form You claimed the incorrect amount because of a mathematical error made in any year. Irs 2011 tax form You claimed the incorrect amount because of a posting error made in any year. Irs 2011 tax form You have not adopted a method of accounting for property placed in service by you in tax years ending after December 29, 2003. Irs 2011 tax form You claimed the incorrect amount on property placed in service by you in tax years ending before December 30, 2003. Irs 2011 tax form   Generally, you adopt a method of accounting for depreciation by using a permissible method of determining depreciation when you file your first tax return for the property used in your rental activity. Irs 2011 tax form This also occurs when you use the same impermissible method of determining depreciation (for example, using the wrong MACRS recovery period) in two or more consecutively filed tax returns. Irs 2011 tax form   If an amended return is allowed, you must file it by the later of the following dates. Irs 2011 tax form 3 years from the date you filed your original return for the year in which you did not deduct the correct amount. Irs 2011 tax form A return filed before an unextended due date is considered filed on that due date. Irs 2011 tax form 2 years from the time you paid your tax for that year. Irs 2011 tax form Changing your accounting method. Irs 2011 tax form   To change your accounting method, you generally must file Form 3115, Application for Change in Accounting Method, to get the consent of the IRS. Irs 2011 tax form In some instances, that consent is automatic. Irs 2011 tax form For more information, see Changing Your Accounting Method in Publication 946,  chapter 1. Irs 2011 tax form Prev  Up  Next   Home   More Online Publications