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Updated over 1 year ago, 04/19/2023

User Stats

28
Posts
9
Votes
Margaret Feit
9
Votes |
28
Posts

Changing Depreciation Period from 27.5 to 39

Margaret Feit
Posted

I have a couple of short term rentals, definitely under 7 days average rental period. When I bought them several years ago, I started off depreciating them over 27.5 years, but after reading much conflicting information online, I have come to the conclusion that they should really be depreciating over 39 years due to the transient occupancy rules.

So now that I am 5 years in, can/should I change the depreciation period? Is there a straightforward way to do that without having to go back and amend multiple years or file a 3115? Or now that I'm this far into it, is it better to just continue with them as they are? (Not that any CPA would give me official advice to continue filing incorrectly... but realistically, what is the best course of action at this point?)

If I don't go back and change the earlier properties, but I add a new STR to my portfolio, should I start the new one at 39 years even though it is inconsistent with the existing properties? Or does that inconsistency raise red flags on my return?

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