Can you change your depreciation value?
Someone asked me a question on my site about changing depreciation for past years. I did some research but could not find a solid answer.
Let's say you buy a property for 200k and use 100k for bldg and 100k for land. 5 years later you realize that you should/could have taken 150k for bldg. What are your options?
To me, it looks like you could amend 3 years worth of returns(and lose out on 2 years of under depreciation but still have to pay it back at 25% when you sell) or file a 3115 with the IRS and take it all at once and use the new depreciation value of 150k going forward?
I know you have to take depreciation but what if you took the wrong amount(not as much as you could have) and never fixed it. I always see that you have to pay depreciation recapture tax whether you claim it or not but how would the IRS know?