Changing Depreciation Schedule

[Vlad K.]

I had an accountant prepare my taxes a few years ago and she depreciated some water heaters using a 15 year schedule. I followed suit and did the same thing when I did my taxes last year. Now I'm using TurboTax and it is saying that it should be a 5 year depreciation. TurboTax let me enter what I've paid so far and the depreciated this year based on a 5 year schedule. Is it OK to switch?

TLDR: Can you switch the length of time over which you depreciate once you've started?

[Blake Meester]

@Vlad K.

As with most tax issues… the answer depends on your answers to a long list of questions. This can be a complex issue if you have to file a Form 3115 or amend prior tax returns which would likely be the fix. I would recommend that you seek some professional advice. Get an extension for 2015 and then find a good RE tax professional after the busy season.

If you are determined to try to fix it yourself, start with the IRS Publication 496. The last section explains how to correct deprecation deductions and the situations where filing an amended tax return or a Form 3115 is warranted.

Good luck!