Depreciation missed on Rental Property for a few years, Can I continue to depreciate?

[Michelle]

I have a client who has rental property. Several years ago she had a professional prepare her taxes and the property was being depreciated. Then she started doing her taxes on her own and never continued the depreciation. Now I have them to prepare and don't quit know how to continue the depreciation. I would like to continue depreciating the property, but she doesn't have the old returns. We tried to obtain her tax return transcripts, but the IRS will not send her the tax return transcripts that are over 4 years old. We need them from 2005, they say they are not available.
Is there any way I can start to depreciate the property again? If so, any idea how I would do it? She does know when she purchased it and for how much. But doesn't know how many years the depreciation was taken in the past.

Thank you so much for any information in advance.

[Roland Slugg]

Doesn't she even have her own tax returns all the way back?

The subject of this thread is one of the most common ones posted here over the years. But the replies I've read are always inconclusive. The question people have is, "Is there a way to make up for several years of under-depreciating or non-depreciating an asset?" I wish I knew the answer but, fortunately, I've never had to. I do feel sorry for preparers who inherit a situation like this, though, and always wonder how they get past the "allowed or allowable" principle.

[claud46]

For the prior three years, amend them to include the depreciation

Use this (Safe & Reliable) Depreciation Calculator to calculate missed year amounts
You put is Purchase Year, amount and method
It will produce a printable report of Depreciation, from year one to the last year

http://www.free-online-calculator-use.com/macrs-depreciation-calculator.html#calculator

[Lion]

Then use Form 3115 to catch up.

[Michelle]

Thank you very much. Both of you for the answers. I really appreciate it.

[Kram BergGold]

Form 3115 Needs to be Used

Within the last month or so I read that you can only amend two years back for a depreciation error. If the error goes further back you have to use Form 3115. I don't know why this is but I think I read it in something from NATP.

[TaxGuyBill]

Within the last month or so I read that you can only amend two years back for a depreciation error. If the error goes further back you have to use Form 3115. I don't know why this is but I think I read it in something from NATP.

Yeah, when somebody files depreciation (or the lack of claiming depreciation) for 2 years in a row, it establishes an "accounting method", which can only be changed by Form 3115.

https://www.irs.gov/publications/p946/ch01.html#en_US_2016_publink1000107384

[Snaggletooth]

"Depreciable" Option

We all have discussed the scenario where a new client sells rental property which has never been depreciated. We are told to treat "depreciable" amounts as if they had been depreciated anyway, and create section 1250 amounts which have to be recovered upon the sale.

There is an alternate life available for rental property. If stuck with the need to create "depreciable" amounts, can we use 40 years instead of 27.5 years? For property held for a very long time, there may have been even longer lives available for the year the property first became rental.

[taxea]

Then use Form 3115 to catch up.

Or use the F3115 for the catchup in the current year and you won't have to do 1040x unless your goal is to charge the client more.