Stessa: How do I record home depreciation

Rental Property Investor · Charlotte, NC · Member since 2019 · 161 posts · 178 votes

I use stessa to track my transactions both incoming and outgoing. At the end of the year there is the option to download a tax report that includes and income statement, net cash flow, and capital expenditures. I can't seem to figure out how to include the home depreciation in those numbers so that my tax amounts are correct. Please help.

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Basit SiddiqiBusiness Member

Accountant · New York, NY · Member since 2015 · 8k+ posts · 3k+ votes

@Aidan Mulligan

Depreciation expense is normally not calculated by the accounting software that you use, Stessa in this case.

Depreciation is normally calculated based on the MACRS life and the basis for the building.
I assume we are talking about a building, in this case, it would be depreciated over 27.5 years.

The reason the accounting software will not calculate it is because
A) they do not know when you put the property into service
B) They do not know the MACRS class life
C) There are multiple ways to determine the breakout of building vs land for depreciation purposes

If you are working with an accounting, he should be able to calculate your depreciation expense.

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Amy Fulbright
DFW, TX · Member since 2018 · 41 posts · 20 votes
6y
There's not a category for it currently, and I assume that's because there are a variables to how the Basis is calculated. I would re-use a CapEx category, so that I get access to the Useful Life field, and by extension, the annual depreciation amounts can be calculated. I'd run a Tax Packet, and then I'd delete the transaction again so that I have the correct Cash Flow statement.
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Basit SiddiqiBusiness Member
Accountant · New York, NY · Member since 2015 · 8k+ posts · 3k+ votes
6y
@Aidan Mulligan

Depreciation expense is normally not calculated by the accounting software that you use, Stessa in this case.

Depreciation is normally calculated based on the MACRS life and the basis for the building.
I assume we are talking about a building, in this case, it would be depreciated over 27.5 years.

The reason the accounting software will not calculate it is because
A) they do not know when you put the property into service
B) They do not know the MACRS class life
C) There are multiple ways to determine the breakout of building vs land for depreciation purposes

If you are working with an accounting, he should be able to calculate your depreciation expense.
[email protected]917-280-8544
Basit Siddiqi CPA4.979 Reviews
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Aidan Mulligan
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Rental Property Investor · Charlotte, NC · Member since 2019 · 161 posts · 178 votes
6y
@Basit Siddiqi thank you for the comment but Stessa is not accounting software. It's a property management site that tracks all sorts of expenses and one of the features is that it creates an end of year summary for tax purposes based on your income and simple expenses.
Stessa has the option to input depreciating expenses, with the useful life and the in service date, into its transaction page. However, as the site is set up right now it merely logs it but not in the way that is useful for taxes.
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Cameron Lam
Gilbert, AZ · Member since 2019 · 106 posts · 604 votes
6y
did you find the answer to this? I just started using stessa
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Brian Braddock
Rental Property Investor · San Diego, CA · Member since 2020 · 26 posts · 32 votes
6y
@Basit Siddiqi When does the 27.5 years start? Is it when the property is originally built, when you yourself become the owner, or when you put it on the market for rent? A real example, I bought a SFH that has these years: Built in 1950, I bought it in 2014, and put it up for rent in 2017. Thanks!
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Basit SiddiqiBusiness Member
Accountant · New York, NY · Member since 2015 · 8k+ posts · 3k+ votes
6y
Originally posted by @Brian Braddock:
@Basit Siddiqi When does the 27.5 years start? Is it when the property is originally built, when you yourself become the owner, or when you put it on the market for rent? A real example, I bought a SFH that has these years: Built in 1950, I bought it in 2014, and put it up for rent in 2017. Thanks!

When the property is put into service.
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Brian Braddock
Rental Property Investor · San Diego, CA · Member since 2020 · 26 posts · 32 votes
6y
@Basit Siddiqi Sorry if I sound naive, but can you confirm what “put into service” means? Is that when you put it up for rent?
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Natalie KolodijBusiness Member
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Tax Strategist| National Tax Educator| Accepting New Clients · Member since 2014 · 3k+ posts · 4k+ votes
6y
One of the downfalls to stessa is that it isn't a full accounting software.
It's made to be easier- which it is- but it doesn't track balance sheets.
A balance sheet is where you'd record an asset and it's accumulated depreciation.
The actual annual depreciation amount is normally calculated in your tax software- and then if you're keeping your books on tax basis you'd enter a year end adjustment. Stessa doesn't have this option.
If you want to calculate the depreciation and manually enter it in I'm sure there's a way to override it just so you know where you'll land for taxes- but lots of people like having their books show more of the cash flow side.
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