My advice is to hire a good accountant who has experience with income producing real estate. Lifes to short and it takes valuable time from your investing when you end up fiddling with your IRS taxes.
Right every one of your rental properties will have it’s own Form 4562. You can further not only depreciate the entire building as a whole, but depreciate the various components of that building such as roofs, furnaces, appliances, hot water heaters, air conditioners etc. It’s a mess when you try to do it yourself and as you are seeing if you place the property into service anytime of the year other than Jan. 1st you have to take a prorated amount.
When I pick up my taxes from my accountant, I end up having a two inch thick return to send to the IRS.
I am still trying to get my taxes done, I acquired my 1st rental property last year (Duplex) and am trying to understand this mess of paperwork the IRS has. Do I file a separate Form 4562- (Depreciation and Amortization) for each rental property I acquire in that tax year? Is this considered “Placed in Service”?
I thought it had to be easier than this (Cost-Land Value divided by 27.5, right?) No, I have to use a Mid-month convention and refer to table C= 3.182%. I thought my issues would be Tenants and Toilets. Add Taxes to the bane of Landlords. I know Real Estate is the IDEAL investment, little did I know the paperwork involved with the -D- Depreciation… it should be IDEALLY LY= Lucky You!
Technically, the property is not “placed in service” until it is advertised for rental use. For example, you acquire an investment rental property on December 5, then spend two months doing rehab work. You begin advertising/showing the property for rental use on Feb 15.
The property is “placed in service” on Feb 15. You are not allowed a depreciation deduction until the property is placed in service.
I use TurboTax for my tax return. The tax software has all the depreciation schedules and fills out the correct forms for me. Information entered one year is captured, carried forward and updated the next year.