With a new rental property co-owned with wife, do I add 50% or 100% of purchase price to UCC additions on my return?

[derekchha]

I bought a rental with wife last year with my wife and we own it 50/50.  I recorded it as "co-ownership" on last year's tax return and added 50% of purchase price to UCC on my tax return, not 100%. 

The revenue and costs seem to be split properly automatically by Turbotax.  However, when I reviewed the CCA calculation, it looks wrong.  It looks like Turbotax is calculating the CCA based on the 50% purchase price I entered into UCC, and then taking half of that amount (I believe I'm effectively only getting 25% of the total CCA on the property instead of 50%)

Should I have entered 100% of the purchase price into UCC additions last year to ensure Turbotax appropriately calculates CCA?  The additional wrinkle is that I have another rental property that is only under my name and it seems like the net income on that property influences how CCA is deducted on the jointly owned property.  Specifically, the amount of CCA deducted on the joint property seems to be different on my return vs hers.

[TurboTaxTatsiana1]

You have entered correctly 50% on your side. You also should enter 50% ( duplicate same entries) under your wife's rental property records.This will account for 100% of purchase. 

The reason you see only 25 % on your return is due to the Half Year rule : you are entitled to only half of depreciation  deduction in the year of additions, because you have not owned asses for the full year. Next year you will see a full deduction. 

[derekchha]

Thanks but I should clarify that I purchased the property in 2016, so the half year rule would have been applied on my 2016 tax return.

On the 2017 return, it still seems like CCA in Area A of the T776 is calculated on the UCC I entered (ie. 50% of purchase price) and then only half of that amount is included on row 9936 to reflect what TurboTax considers to be my 50%.  Obviously, TurboTax doesn't realize that I've already done the 50% allocation already in the starting UCC.

Do you have any suggestions on how to fix this?  I hope I don't need to manually adjust this every year, otherwise it'll be immensely painful.

[TurboTaxTatsiana1]

The other reason you may see limited CCA claim is because you are not allowed to create or increase loss by CCA claim. Therefore Turbo tax will calculate min amount of CCA needed to take your rental income to 0 and will claim only  that not  waste your deductions. Please check if the claim amount calculated by TTO reduces your net income from rental operation to zero.

[derekchha]

I'll double check tonight, but I recall I had lots of net income room to use more CCA deductions.

If there is net income room, do you have any other suggestions?

[mcnicolg]

I'm experiencing the same issue and confusion. Has the CCA data entry system changed since this 2019 post?

I understood from prior years and from other people's posts on here that when adding a new CCA item I should put 50% of the total cost in each spouses' CCA page (e.g. 50% of cost of furnace).  But it looks like Turbotax software is then is only adding 50% of this amount to the base amount (i.e. resulting 25% of CCA per partner instead of 50%).

I see multiple posts on here that state to enter 50% of CCA in "Total cost" - but two Turbotax staff I spoke to said to enter 100%.

I know in the first year after expense you can only claim 50% of eligible amount (i.e. 2% for class 1) but this should affect the amount claimed that year, not the "cost" or "base amount". 

[TurboTaxGinette]

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[mcnicolg]

Thank you. I spoke to a third Turbotax staff member (this time through Assist & Review) and they were very helpful. They ran a bunch of tests of entering different data, concluded that 50% of total cost should be entered in each spouses' CCA section. 

Definitely an area that should be clarified within the software. Also an area for education for staff given the variation in answers between three staff viewing my screen over the course of one day and variation between answers in the community threads. 

[TurboTaxBrenda]

Thank you for the feedback. Many times the TurboTax Online and the TurboTax Desktop can work differently- that is why we usually ask our customers which one they are using so that we can give them the proper instructions. 

Thank you for choosing TurboTax.