IRS form 4562 for a rental property placed in service in 2005?
Tom S asked:
I had an accountant do my taxes last year, and they came up with the depreciation schedule in Part III of the form. Where does this property go this year? Part IV? And what do I use for my basis of depreciation? The original amount, or the original amount minus what I deducted from my taxes last year?
Thanks in advance.
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It will appear on line 17 in Part III of the form. You enter the total depreciation for all assets placed in service prior to 2006. The basis used for depreciation purposes will not change from when you originally began depreciating the asset. You do not reduce your basis in the asset by the depreciation taken in previous years in determining your depreciation for the current year. The accumulated depreciation will only adjust your basis in the asset when you sell the property and use the adjusted basis in determining your gain/loss on the sale of the asset. If you made improvements to the property, the improvements are added as a separate asset.