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State Amended Form

2012 Tax Forms Irs2011 Irs Form 1040File Income Tax 2014Income Tax Forms 1040ezComplete 1040x OnlineH & R Block Military1040 Ez TaxH & R Block Free TaxesFree Tax Filing For Federal And State1040nr Ez Online FreeMilitary Tax Deduction1040ez Instruction BookAmended Utah State Tax ReturnTax Compliance Software2012 Free Tax Return FilingHow To File 2006 Taxes Online FreeRi 1040nrFree State Tax Forms To PrintFile 1040ez OnlineHr Block Tax SoftwareFiling Taxes With UnemploymentState Income Tax QuestionsI Need To File My 2010 Tax ReturnAmended Tax Form 1040x2010 Tax FormsAmendment To 2010 Tax ReturnOhio State Tax Forms 2011Filing Taxes If UnemployedTax 2012Efile Tax ReturnH&r Block At HomeWebsite Can I Efile Past Year Tax Returns1040x Online FormFile 2006 Taxes For Free10ezIrs Tax Amendment FormTax Act 2010Tax Act Online 20121040 Ez File1040ez Electronic Filing

State Amended Form

State amended form Publication 584-B - Additional Material Table of Contents This image is too large to be displayed in the current screen. State amended form Please click the link to view the image. State amended form Office Furniture and Fixtures This image is too large to be displayed in the current screen. State amended form Please click the link to view the image. State amended form Information Systems This image is too large to be displayed in the current screen. State amended form Please click the link to view the image. State amended form Motor Vehicles This image is too large to be displayed in the current screen. State amended form Please click the link to view the image. State amended form Office Supplies This image is too large to be displayed in the current screen. State amended form Please click the link to view the image. State amended form Building, Components, and Land This image is too large to be displayed in the current screen. State amended form Please click the link to view the image. State amended form Equipment Tax Publications for Individual TaxpayersSee How To Get Tax Help for a variety of ways to get publications, including by computer, phone, and mail. State amended form General Guides 1 Your Rights as a Taxpayer 17 Your Federal Income Tax For Individuals 334 Tax Guide for Small Business (For Individuals Who Use Schedule C or C-EZ) 509 Tax Calendars for 2012 910 IRS Guide to Free Tax Services Specialized Publications 3 Armed Forces’ Tax Guide 54 Tax Guide for U. State amended form S. State amended form Citizens and Resident Aliens Abroad 225 Farmer’s Tax Guide 463 Travel, Entertainment, Gift, and Car Expenses 501 Exemptions, Standard Deduction, and Filing Information 502 Medical and Dental Expenses (Including the Health Coverage Tax Credit) 503 Child and Dependent Care Expenses 504 Divorced or Separated Individuals 505 Tax Withholding and Estimated Tax 514 Foreign Tax Credit for Individuals 516 U. State amended form S. State amended form Government Civilian Employees Stationed Abroad 517 Social Security and Other Information for Members of the Clergy and Religious Workers 519 U. State amended form S. State amended form Tax Guide for Aliens 521 Moving Expenses 523 Selling Your Home 524 Credit for the Elderly or the Disabled 525 Taxable and Nontaxable Income 526 Charitable Contributions 527 Residential Rental Property (Including Rental of Vacation Homes) 529 Miscellaneous Deductions 530 Tax Information for Homeowners 531 Reporting Tip Income 535 Business Expenses 536 Net Operating Losses (NOLs) for Individuals, Estates, and Trusts 537 Installment Sales 541 Partnerships 544 Sales and Other Dispositions of Assets 547 Casualties, Disasters, and Thefts 550 Investment Income and Expenses (Including Capital Gains and Losses) 551 Basis of Assets 554 Tax Guide for Seniors 555 Community Property 556 Examination of Returns, Appeal Rights, and Claims for Refund 559 Survivors, Executors, and Administrators 561 Determining the Value of Donated Property 570 Tax Guide for Individuals With Income From U. State amended form S. State amended form Possessions 571 Tax-Sheltered Annuity Plans (403(b) Plans) For Employees of Public Schools and Certain Tax-Exempt Organizations 575 Pension and Annuity Income 584 Casualty, Disaster, and Theft Loss Workbook (Personal-Use Property) 587 Business Use of Your Home (Including Use by Daycare Providers) 590 Individual Retirement Arrangements (IRAs) 594 The IRS Collection Process 596 Earned Income Credit (EIC) 721 Tax Guide to U. State amended form S. State amended form Civil Service Retirement Benefits 901 U. State amended form S. State amended form Tax Treaties 907 Tax Highlights for Persons with Disabilities 908 Bankruptcy Tax Guide 915 Social Security and Equivalent Railroad Retirement Benefits 925 Passive Activity and At-Risk Rules 926 Household Employer’s Tax Guide For Wages Paid in 2012 929 Tax Rules for Children and Dependents 936 Home Mortgage Interest Deduction 946 How To Depreciate Property 947 Practice Before the IRS and Power of Attorney 950 Introduction to Estate and Gift Taxes 969 Health Savings Accounts and Other Tax-Favored Health Plans 970 Tax Benefits for Education 971 Innocent Spouse Relief 972 Child Tax Credit 1542 Per Diem Rates (For Travel Within the Continental United States) 1544 Reporting Cash Payments of Over $10,000 (Received in a Trade or Business) 1546 Taxpayer Advocate Service – Your Voice at the IRS Spanish Language Publications 1SP Derechos del Contribuyente 17(SP) El Impuesto Federal sobre los Ingresos Para Personas Fisicas 547(SP) Hechos Fortuitos Desastres y Robos 584(SP) Registro de Pérdidas por Hechos Fortuitos (Imprevistos), Desastres y Robos (Propiedad de Uso Personal) 594SP El Proceso de Cobro del IRS 596SP Crédito por Ingreso del Trabajo 850(EN/SP) English-Spanish Glossary of Words and Phrases Used in Publications Issued by the Internal Revenue Service 1544 (SP) Informe de Pagos en Efectivo en Exceso de $10,000 (Recibidos en una Ocupación o Negocio) Commonly Used Tax FormsSee How To Get Tax Help for a variety of ways to get forms, including by computer, phone, and mail. State amended form Form Number and Title 1040 U. State amended form S. State amended form Individual Income Tax Return Sch A Itemized Deductions Sch B Interest and Ordinary Dividends Sch C Profit or Loss From Business Sch C-EZ Net Profit From Business Sch D Capital Gains and Losses Sch E Supplemental Income and Loss Sch EIC Earned Income Credit Sch F Profit or Loss From Farming Sch H Household Employment Taxes Sch J Income Averaging for Farmers and Fishermen Sch R Credit for the Elderly or the Disabled Sch SE Self-Employment Tax 1040A U. State amended form S. State amended form Individual Income Tax Return Sch B Interest and Ordinary Dividends 1040EZ Income Tax Return for Single and Joint Filers With No Dependents 1040-ES Estimated Tax for Individuals 1040X Amended U. State amended form S. State amended form Individual Income Tax Return 2106 Employee Business Expenses 2106-EZ Unreimbursed Employee Business Expenses 2210 Underpayment of Estimated Tax by Individuals, Estates, and Trusts 2441 Child and Dependent Care Expenses 2848 Power of Attorney and Declaration of Representative 2848(SP) Poder Legal y Declaración del Representante 3903 Moving Expenses 4562 Depreciation and Amortization 4868 Application for Automatic Extension of Time To File U. State amended form S. State amended form Individual Income Tax Return 4868(SP) Solicitud de Prórroga Automática para Presentar la Declaración del Impuesto sobre el Ingreso Personal de los Estados Unidos 4952 Investment Interest Expense Deduction 5329 Additional Taxes on Qualified Plans (Including IRAs) and Other Tax-Favored Accounts 6251 Alternative Minimum Tax—Individuals 8283 Noncash Charitable Contributions 8582 Passive Activity Loss Limitations 8606 Nondeductible IRAs 8812 Additional Child Tax Credit 8822 Change of Address 8829 Expenses for Business Use of Your Home 8863 Education Credits (American Opportunity and Lifetime Learning Credits) 8949 Sales and Other Dispositions of Capital Assets 9465 Installment Agreement Request 9465(SP) Solicitud para un Plan de Pagos a Plazos         Prev  Up  Next   Home   More Online Publications
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The State Amended Form

State amended form 2. State amended 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. State amended form You do this by depreciating the property; that is, by deducting some of the cost each year on your tax return. State amended 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. State amended form You cannot simply deduct your mortgage or principal payments, or the cost of furniture, fixtures and equipment, as an expense. State amended form You can deduct depreciation only on the part of your property used for rental purposes. State amended form Depreciation reduces your basis for figuring gain or loss on a later sale or exchange. State amended form You may have to use Form 4562 to figure and report your depreciation. State amended form See Which Forms To Use in chapter 3. State amended form Also see Publication 946. State amended form Section 179 deduction. State amended 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. State amended form This deduction is not allowed for property used in connection with residential rental property. State amended form See chapter 2 of Publication 946. State amended form Alternative minimum tax (AMT). State amended form   If you use accelerated depreciation, you may be subject to the AMT. State amended 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). State amended form   The prescribed depreciation methods for rental real estate are not accelerated, so the depreciation deduction is not adjusted for the AMT. State amended form However, accelerated methods are generally used for other property connected with rental activities (for example, appliances and wall-to-wall carpeting). State amended form   To find out if you are subject to the AMT, see the Instructions for Form 6251. State amended 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. State amended form What Rental Property Can Be Depreciated? You can depreciate your property if it meets all the following requirements. State amended form You own the property. State amended form You use the property in your business or income-producing activity (such as rental property). State amended form The property has a determinable useful life. State amended form The property is expected to last more than one year. State amended form Property you own. State amended form   To claim depreciation, you usually must be the owner of the property. State amended form You are considered as owning property even if it is subject to a debt. State amended form Rented property. State amended form   Generally, if you pay rent for property, you cannot depreciate that property. State amended form Usually, only the owner can depreciate it. State amended form However, if you make permanent improvements to leased property, you may be able to depreciate the improvements. State amended form See Additions or improvements to property , later in this chapter, under Recovery Periods Under GDS. State amended form Cooperative apartments. State amended 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. State amended form See chapter 4, Special Situations. State amended form Property having a determinable useful life. State amended form   To be depreciable, your property must have a determinable useful life. State amended form This means that it must be something that wears out, decays, gets used up, becomes obsolete, or loses its value from natural causes. State amended form What Rental Property Cannot Be Depreciated? Certain property cannot be depreciated. State amended form This includes land and certain excepted property. State amended form Land. State amended form   You cannot depreciate the cost of land because land generally does not wear out, become obsolete, or get used up. State amended form But if it does, the loss is accounted for upon disposition. State amended form The costs of clearing, grading, planting, and landscaping are usually all part of the cost of land and cannot be depreciated. State amended form   Although you cannot depreciate land, you can depreciate certain land preparation costs, such as landscaping costs, incurred in preparing land for business use. State amended 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. State amended form Example. State amended form You built a new house to use as a rental and paid for grading, clearing, seeding, and planting bushes and trees. State amended 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. State amended form If you replace the house, you would have to destroy the bushes and trees right next to it. State amended form These bushes and trees are closely associated with the house, so they have a determinable useful life. State amended form Therefore, you can depreciate them. State amended form Add your other land preparation costs to the basis of your land because they have no determinable life and you cannot depreciate them. State amended form Excepted property. State amended form   Even if the property meets all the requirements listed earlier under What Rental Property Can Be Depreciated , you cannot depreciate the following property. State amended form Property placed in service and disposed of (or taken out of business use) in the same year. State amended form Equipment used to build capital improvements. State amended form You must add otherwise allowable depreciation on the equipment during the period of construction to the basis of your improvements. State amended form For more information, see chapter 1 of Publication 946. State amended 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. State amended 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. State amended 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. State amended form Even if you are not using the property, it is in service when it is ready and available for its specific use. State amended form Example 1. State amended form On November 22 of last year, you purchased a dishwasher for your rental property. State amended form The appliance was delivered on December 7, but was not installed and ready for use until January 3 of this year. State amended form Because the dishwasher was not ready for use last year, it is not considered placed in service until this year. State amended 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. State amended form Example 2. State amended form On April 6, you purchased a house to use as residential rental property. State amended form You made extensive repairs to the house and had it ready for rent on July 5. State amended form You began to advertise the house for rent in July and actually rented it beginning September 1. State amended form The house is considered placed in service in July when it was ready and available for rent. State amended form You can begin to depreciate the house in July. State amended form Example 3. State amended form You moved from your home in July. State amended form During August and September you made several repairs to the house. State amended form On October 1, you listed the property for rent with a real estate company, which rented it on December 1. State amended form The property is considered placed in service on October 1, the date when it was available for rent. State amended form Conversion to business use. State amended form   If you place property in service in a personal activity, you cannot claim depreciation. State amended 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. State amended form You place the property in service for business or income-producing use on the date of the change. State amended form Example. State amended form You bought a house and used it as your personal home several years before you converted it to rental property. State amended 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. State amended 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. State amended 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). State amended 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. State amended 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. State amended form For this purpose, your yearly depreciation deductions include any depreciation that you were allowed to claim, even if you did not claim it. State amended form See Basis of Depreciable Property , later. State amended 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. State amended 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. State amended form You sell or exchange the property. State amended form You convert the property to personal use. State amended form You abandon the property. State amended form The property is destroyed. State amended form Depreciation Methods Generally, you must use the Modified Accelerated Cost Recovery System (MACRS) to depreciate residential rental property placed in service after 1986. State amended form If you placed rental property in service before 1987, you are using one of the following methods. State amended form ACRS (Accelerated Cost Recovery System) for property placed in service after 1980 but before 1987. State amended form Straight line or declining balance method over the useful life of property placed in service before 1981. State amended form See MACRS Depreciation , later, for more information. State amended form Rental property placed in service before 2013. State amended form   Continue to use the same method of figuring depreciation that you used in the past. State amended form Use of real property changed. State amended 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. State amended form This includes your residence that you changed to rental use. State amended form See Property Owned or Used in 1986 in Publication 946, chapter 1, for those situations in which MACRS is not allowed. State amended form Improvements made after 1986. State amended form   Treat an improvement made after 1986 to property you placed in service before 1987 as separate depreciable property. State amended 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. State amended form For more information about improvements, see Additions or improvements to property , later in this chapter under Recovery Periods Under GDS. State amended form This publication discusses MACRS depreciation only. State amended form If you need information about depreciating property placed in service before 1987, see Publication 534. State amended 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. State amended 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. State amended 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. State amended form Basis and adjusted basis are explained in the following discussions. State amended 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. State amended form See Basis of Property Changed to Rental Use in chapter 4. State amended form Cost Basis The basis of property you buy is usually its cost. State amended form The cost is the amount you pay for it in cash, in debt obligation, in other property, or in services. State amended 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. State amended form Exception. State amended 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. State amended form Such taxes were deductible before 1987 and after 2003. State amended form Loans with low or no interest. State amended 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. State amended form See Unstated Interest and Original Issue Discount (OID) in Publication 537, Installment Sales. State amended form Real property. State amended 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. State amended form Real estate taxes. State amended 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. State amended form You cannot deduct them as taxes paid. State amended form   If you reimburse the seller for real estate taxes the seller paid for you, you can usually deduct that amount. State amended form Do not include that amount in your basis in the property. State amended form Settlement fees and other costs. State amended form   The following settlement fees and closing costs for buying the property are part of your basis in the property. State amended form Abstract fees. State amended form Charges for installing utility services. State amended form Legal fees. State amended form Recording fees. State amended form Surveys. State amended form Transfer taxes. State amended form Title insurance. State amended 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. State amended form   The following are settlement fees and closing costs you cannot include in your basis in the property. State amended form Fire insurance premiums. State amended form Rent or other charges relating to occupancy of the property before closing. State amended 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. State amended form   Also, do not include amounts placed in escrow for the future payment of items such as taxes and insurance. State amended form Assumption of a mortgage. State amended 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. State amended form Example. State amended form You buy a building for $60,000 cash and assume a mortgage of $240,000 on it. State amended form Your basis is $300,000. State amended form Separating cost of land and buildings. State amended 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. State amended 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. State amended 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. State amended form Example. State amended form You buy a house and land for $200,000. State amended form The purchase contract does not specify how much of the purchase price is for the house and how much is for the land. State amended 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. State amended 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. State amended 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). State amended 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. State amended form If you received property in one of these ways, see Publication 551 for information on how to figure your basis. State amended 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. State amended form The result of these adjustments to the basis is the adjusted basis. State amended form Increases to basis. State amended form   You must increase the basis of any property by the cost of all items properly added to a capital account. State amended form These include the following. State amended 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. State amended form Amounts spent after a casualty to restore the damaged property. State amended form The cost of extending utility service lines to the property. State amended form Legal fees, such as the cost of defending and perfecting title, or settling zoning issues. State amended form Additions or improvements. State amended 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. State amended form This includes all direct costs, such as material and labor, but does not include your own labor. State amended form It also includes all expenses related to the addition or improvement. State amended 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. State amended 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. State amended form   Keep separate accounts for depreciable additions or improvements made after you place the property in service in your rental activity. State amended form For information on depreciating additions or improvements, see Additions or improvements to property , later in this chapter, under Recovery Periods Under GDS. State amended form    The cost of landscaping improvements is usually treated as an addition to the basis of the land, which is not depreciable. State amended form However, see What Rental Property Cannot Be Depreciated, earlier. State amended form Assessments for local improvements. State amended 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. State amended 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. State amended form Also add the cost of legal fees paid to obtain a decrease in an assessment levied against property to pay for local improvements. State amended form You cannot deduct these items as taxes or depreciate them. State amended form    However, you can deduct as taxes, charges or assessments for maintenance, repairs, or interest charges related to the improvements. State amended form Do not add them to your basis in the property. State amended form Deducting vs. State amended form capitalizing costs. State amended form   Do not add to your basis costs you can deduct as current expenses. State amended form However, there are certain costs you can choose either to deduct or to capitalize. State amended form If you capitalize these costs, include them in your basis. State amended form If you deduct them, do not include them in your basis. State amended 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. State amended form   For more information about deducting or capitalizing costs and how to make the election, see Carrying Charges in Publication 535, chapter 7. State amended form Decreases to basis. State amended form   You must decrease the basis of your property by any items that represent a return of your cost. State amended form These include the following. State amended form Insurance or other payment you receive as the result of a casualty or theft loss. State amended form Casualty loss not covered by insurance for which you took a deduction. State amended form Amount(s) you receive for granting an easement. State amended 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. State amended form Exclusion from income of subsidies for energy conservation measures. State amended form Special depreciation allowance claimed on qualified property. State amended form Depreciation you deducted, or could have deducted, on your tax returns under the method of depreciation you chose. State amended form If you did not deduct enough or deducted too much in any year, see Depreciation under Decreases to Basis in Publication 551. State amended form   If your rental property was previously used as your main home, you must also decrease the basis by the following. State amended 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. State amended 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. State amended form Amount of qualified principal residence indebtedness discharged on or after January 1, 2007. State amended form Claiming the Special Depreciation Allowance For 2013, your residential rental property may qualify for a special depreciation allowance. State amended form This allowance is figured before you figure your regular depreciation deduction. State amended form See Publication 946, chapter 3, for details. State amended form Also see the Instructions for Form 4562, Line 14. State amended form If you qualify for, but choose not to take, a special depreciation allowance, you must attach a statement to your return. State amended form The details of this election are in Publication 946, chapter 3, and the Instructions for Form 4562, Line 14. State amended form MACRS Depreciation Most business and investment property placed in service after 1986 is depreciated using MACRS. State amended form This section explains how to determine which MACRS depreciation system applies to your property. State amended form It also discusses other information you need to know before you can figure depreciation under MACRS. State amended form This information includes the property's: Recovery class, Applicable recovery period, Convention, Placed-in-service date, Basis for depreciation, and Depreciation method. State amended 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). State amended form You must use GDS unless you are specifically required by law to use ADS or you elect to use ADS. State amended 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. State amended 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. State amended 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. State amended form For more information, see What Method Can You Use To Depreciate Your Property? in Publication 946, chapter 1. State amended form Electing ADS If you choose, you can use the ADS method for most property. State amended form Under ADS, you use the straight line method of depreciation. State amended 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. State amended form However, the election applies on a property-by-property basis for residential rental property and nonresidential real property. State amended 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. State amended form Once you make this election, you can never revoke it. State amended 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. State amended 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. State amended form The property class generally determines the depreciation method, recovery period, and convention. State amended 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. State amended form Under MACRS, property that you placed in service during 2013 in your rental activities generally falls into one of the following classes. State amended form 5-year property. State amended form This class includes computers and peripheral equipment, office machinery (typewriters, calculators, copiers, etc. State amended form ), automobiles, and light trucks. State amended form This class also includes appliances, carpeting, furniture, etc. State amended form , used in a residential rental real estate activity. State amended 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. State amended form See chapter 5 of Publication 946. State amended form 7-year property. State amended form This class includes office furniture and equipment (desks, file cabinets, etc. State amended form ). State amended 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. State amended form 15-year property. State amended form This class includes roads, fences, and shrubbery (if depreciable). State amended form Residential rental property. State amended 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. State amended 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. State amended 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. State amended form The other property classes do not generally apply to property used in rental activities. State amended form These classes are not discussed in this publication. State amended form See Publication 946 for more information. State amended form Recovery Periods Under GDS The recovery period of property is the number of years over which you recover its cost or other basis. State amended form The recovery periods are generally longer under ADS than GDS. State amended form The recovery period of property depends on its property class. State amended form Under GDS, the recovery period of an asset is generally the same as its property class. State amended form Class lives and recovery periods for most assets are listed in Appendix B of Publication 946. State amended form See Table 2-1 for recovery periods of property commonly used in residential rental activities. State amended form Qualified Indian reservation property. State amended form   Shorter recovery periods are provided under MACRS for qualified Indian reservation property placed in service on Indian reservations. State amended form For more information, see chapter 4 of Publication 946. State amended form Additions or improvements to property. State amended form   Treat additions or improvements you make to your depreciable rental property as separate property items for depreciation purposes. State amended 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. State amended 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. State amended form Example. State amended form You own a residential rental house that you have been renting since 1986 and depreciating under ACRS. State amended form You built an addition onto the house and placed it in service in 2013. State amended form You must use MACRS for the addition. State amended form Under GDS, the addition is depreciated as residential rental property over 27. State amended form 5 years. State amended form Table 2-1. State amended 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. State amended form 27. State amended 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. State amended form   Conventions A convention is a method established under MACRS to set the beginning and end of the recovery period. State amended 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. State amended form Mid-month convention. State amended form    A mid-month convention is used for all residential rental property and nonresidential real property. State amended 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. State amended form Mid-quarter convention. State amended 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. State amended 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. State amended form Example. State amended form During the tax year, Tom Martin purchased the following items to use in his rental property. State amended form He elects not to claim the special depreciation allowance discussed earlier. State amended form A dishwasher for $400 that he placed in service in January. State amended form Used furniture for $100 that he placed in service in September. State amended form A refrigerator for $800 that he placed in service in October. State amended form Tom uses the calendar year as his tax year. State amended form The total basis of all property placed in service that year is $1,300. State amended form The $800 basis of the refrigerator placed in service during the last 3 months of his tax year exceeds $520 (40% × $1,300). State amended form Tom must use the mid-quarter convention instead of the half-year convention for all three items. State amended form Half-year convention. State amended form    The half-year convention is used if neither the mid-quarter convention nor the mid-month convention applies. State amended 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. State amended 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. State amended form You deduct a full year of depreciation for any other year during the recovery period. State amended form Figuring Your Depreciation Deduction You can figure your MACRS depreciation deduction in one of two ways. State amended form The deduction is substantially the same both ways. State amended 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. State amended form In this publication we will use the percentage tables. State amended form For instructions on how to compute the deduction, see chapter 4 of Publication 946. State amended form Residential rental property. State amended form   You must use the straight line method and a mid-month convention for residential rental property. State amended 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). State amended form 5-, 7-, or 15-year property. State amended form   For property in the 5- or 7-year class, use the 200% declining balance method and a half-year convention. State amended form However, in limited cases you must use the mid-quarter convention, if it applies. State amended form For property in the 15-year class, use the 150% declining balance method and a half-year convention. State amended form   You can also choose to use the 150% declining balance method for property in the 5- or 7-year class. State amended 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. State amended form You make this election on Form 4562. State amended form In Part III, column (f), enter “150 DB. State amended form ” Once you make this election, you cannot change to another method. State amended 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. State amended 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. State amended 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. State amended form You elect the straight line method on Form 4562. State amended form In Part III, column (f), enter “S/L. State amended form ” Once you make this election, you cannot change to another method. State amended form MACRS Percentage Tables You can use the percentages in Table 2-2, earlier, to compute annual depreciation under MACRS. State amended form The tables show the percentages for the first few years or until the change to the straight line method is made. State amended form See Appendix A of Publication 946 for complete tables. State amended 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. State amended 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. State amended form How to use the percentage tables. State amended form   You must apply the table rates to your property's unadjusted basis (defined below) each year of the recovery period. State amended 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. State amended 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. State amended 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 . State amended form See Figuring the Deduction Without Using the Tables in Publication 946, chapter 4. State amended form Unadjusted basis. State amended 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. State amended 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. State amended form For more information, see chapter 4 of Publication 946. State amended form Please click here for the text description of the image. State amended form Table 2-2 Tables 2-2a, 2-2b, and 2-2c. State amended form   The percentages in these tables take into account the half-year and mid-quarter conventions. State amended form Use Table 2-2a for 5-year property, Table 2-2b for 7-year property, and Table 2-2c for 15-year property. State amended form Use the percentage in the second column (half-year convention) unless you are required to use the mid-quarter convention (explained earlier). State amended 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. State amended form Example 1. State amended form You purchased a stove and refrigerator and placed them in service in June. State amended form Your basis in the stove is $600 and your basis in the refrigerator is $1,000. State amended form Both are 5-year property. State amended form Using the half-year convention column in Table 2-2a, the depreciation percentage for Year 1 is 20%. State amended form For that year your depreciation deduction is $120 ($600 × . State amended form 20) for the stove and $200 ($1,000 × . State amended form 20) for the refrigerator. State amended form For Year 2, the depreciation percentage is 32%. State amended form That year's depreciation deduction will be $192 ($600 × . State amended form 32) for the stove and $320 ($1,000 × . State amended form 32) for the refrigerator. State amended form Example 2. State amended form Assume the same facts as in Example 1, except you buy the refrigerator in October instead of June. State amended 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 × . State amended form 40 = $640), you are required to use the mid-quarter convention to figure depreciation on both the stove and refrigerator. State amended 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%. State amended form Your depreciation deduction for the refrigerator is $50 ($1,000 x . State amended form 05). State amended 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%. State amended form For that year, your depreciation deduction for the stove is $150 ($600 x . State amended form 25). State amended form Table 2-2d. State amended form    Use this table when you are using the GDS 27. State amended form 5 year option for residential rental property. State amended form Find the row for the month that you placed the property in service. State amended form Use the percentages listed for that month to figure your depreciation deduction. State amended form The mid-month convention is taken into account in the percentages shown in the table. State amended form Continue to use the same row (month) under the column for the appropriate year. State amended form Example. State amended form You purchased a single family rental house for $185,000 and placed it in service on February 8. State amended form The sales contract showed that the building cost $160,000 and the land cost $25,000. State amended form Your basis for depreciation is its original cost, $160,000. State amended 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. State amended form 5 years. State amended form Using Table 2-2d, you find that the percentage for property placed in service in February of Year 1 is 3. State amended form 182%. State amended form That year's depreciation deduction is $5,091 ($160,000 x . State amended form 03182). State amended form Figuring MACRS Depreciation Under ADS Table 2–1, earlier, shows the ADS recovery periods for property used in rental activities. State amended form See Appendix B in Publication 946 for other property. State amended form If your property is not listed in Appendix B, it is considered to have no class life. State amended form Under ADS, personal property with no class life is depreciated using a recovery period of 12 years. State amended form Use the mid-month convention for residential rental property and nonresidential real property. State amended form For all other property, use the half-year or mid-quarter convention, as appropriate. State amended form See Publication 946 for ADS depreciation tables. State amended form Claiming the Correct Amount of Depreciation You should claim the correct amount of depreciation each tax year. State amended 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. State amended form For more information, see Depreciation under Decreases to Basis in Publication 551. State amended 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. State amended form S. State amended form Individual Income Tax Return. State amended 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. State amended form Filing an amended return. State amended form   You can file an amended return to correct the amount of depreciation claimed for any property in any of the following situations. State amended form You claimed the incorrect amount because of a mathematical error made in any year. State amended form You claimed the incorrect amount because of a posting error made in any year. State amended form You have not adopted a method of accounting for property placed in service by you in tax years ending after December 29, 2003. State amended form You claimed the incorrect amount on property placed in service by you in tax years ending before December 30, 2003. State amended 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. State amended 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. State amended form   If an amended return is allowed, you must file it by the later of the following dates. State amended form 3 years from the date you filed your original return for the year in which you did not deduct the correct amount. State amended form A return filed before an unextended due date is considered filed on that due date. State amended form 2 years from the time you paid your tax for that year. State amended form Changing your accounting method. State amended 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. State amended form In some instances, that consent is automatic. State amended form For more information, see Changing Your Accounting Method in Publication 946,  chapter 1. State amended form Prev  Up  Next   Home   More Online Publications