Missed depreciation due to business percentage use error
I converted my residential condo into a rental with in-service date of 5/2009. I erred when adding the rental to my Schedule E and incorrectly began claiming depreciation using a 58.3% business use ratio instead of 100%. I have repeated this error on every Schedule E from 2009 to present. The result, I have missed depreciation of more than $20000 over 15 years. There are many examples in the forum of users who did not claim any depreciation and the standard advice seems to be to use Form 3115 to claim the missed depreciation; but, I could not find any examples of advice to correct a business use % error. What is the best way for me to recover the missed depreciation in my situation?
Most Popular Reply
I would actually start with the question, "Does it make sense to try to get more depreciation now?"
You've owned this property more than 17 years. It won't be much longer before you can't take ANY depreciation. It might be wiser to look at selling this asset and buying something else that will bring you more depreciation offsets. If you are looking at selling, taking more depreciation now would be counterproductive because you would be converting long-term capital gains into ordinary income via depreciation recapture.