Higher depreciation taken in prior years

[Sweta Jain]

Hi,

I purchased a rental in 2020 Nov and when it was tax time for 2020, i used a CPA service. He made a mistake in the way he depreciated the property. He swapped the land and building value while doing depreciation calculation and in effect, I have ended up depreciating using the higher land value. 

Land value is higher in my case than building value!

I carrierd forward the same mistake in 2021, 2022 and 2023 taxes i did using turbo tax!

Now I am trying to fix this mistake and I called the old CPA but he never returned my call. 

I asked HnR block and they said I need to amend all returns. 

I also called turbo tax and they said I just need to file form 3115 and no amends are needed.

Can someone please advise me on how to fix this? If i had taken correct depreciation (lower), it would not have made any difference to my income/tax for these past years. It only changes my passive loss carryover.

Can form 3115 be used to fix an incorrect (higher in my case) cost basis for depreciation? 

Thanks

Shikha

[Michael Plaks]

@Sweta Jain

H&R Block is generally not suited for real estate taxation, and they are wrong in this case, too. TurboTax is technically correct about Form 3115. What they did not tell you is that completing Form 3115 is not a DIY project, it is complicated.

Another thing they did not tell you is that it may be sufficient to adjust your passive loss carryforward and skip the 3115 hassle. While it is not technically compliant, it is probably an acceptable solution in your case.