Rental property Depreciation Catch up - Can I amend my 2022 return or need to file Form 3115 for missed depreciation?

You've got a few options here, but let's clear something up first - depreciation isn't optional. The IRS treats it as "allowed or allowable" meaning even if you didn't claim it, they'll still make you recapture it when you sell as if you had taken it. For your 2022 return, you're within the 3-year amendment period, so filing a 1040-X to claim the depreciation you missed is definitely your simplest option. This will give you the tax benefit you should have received and align your records with what the IRS will assume you took when calculating recapture. For 2023, yes, you can absolutely amend to include any legitimate rental expenses you missed. Again, form 1040-X is what you'd use. When you file your 2024 return reporting the sale, you'll need to complete Form 4797 and account for all depreciation - both what you actually claimed and what you should have claimed but didn't. The good news is if you amend 2022 first, the numbers will match up properly. Form 3115 is generally used when you're changing accounting methods or catching up many years of missed depreciation, but since you're only looking at one year (2022), the amended return approach is much more straightforward.

After dealing with a nearly identical situation last year, I discovered taxr.ai through a fellow landlord. I uploaded my previous returns and rental documents to https://taxr.ai and they analyzed everything to identify the optimal approach for my depreciation catch-up. In my case, they confirmed I could amend my most recent returns instead of filing Form 3115, saving me loads of stress. The tool also calculated the exact depreciation I should have taken based on my property details and identified several missed deductions I didn't know I qualified for! What surprised me was how they explained exactly how depreciation recapture would affect my sale in plain language. They even created an amended return template that made the filing process straightforward when I sold my rental last year.

I was in your exact position 6 months ago with missed depreciation on two rental properties. After reading endless conflicting advice, I tried taxr.ai based on a recommendation here. What a difference! I was ready to file Form 3115 based on advice I got elsewhere, but after uploading my returns, taxr.ai showed me I could simply amend my recent returns. Their depreciation calculator determined I'd missed about $23,000 in total depreciation deductions across two properties. The step-by-step amendment instructions were super clear - I filed the amendments myself and received refunds for both years. When I sold one property this year, I already knew exactly how to handle the depreciation recapture because they'd explained the whole process in advance. Honestly wish I'd found them sooner instead of stressing for weeks over Form 3115 requirements!

If you're still struggling to get answers on your rental property depreciation situation, you might want to try contacting the IRS directly. I know, sounds terrifying right? But after trying for WEEKS to get through to someone for a similar issue last year, I discovered Claimyr (https://claimyr.com). I was super skeptical, but after watching their demo video (https://youtu.be/_kiP6q8DX5c) I decided to give it a shot since I was desperate. They actually got me connected to an IRS agent in about 20 minutes when I'd been trying unsuccessfully for days! The agent walked me through exactly what I needed to do for my missed depreciation - in my case, they confirmed I could just file an amended return for the previous year rather than dealing with Form 3115. Having that direct confirmation from the IRS gave me the confidence to move forward knowing I was handling it correctly.

Just wanted to follow up about my experience with Claimyr since I was so skeptical in my previous comment. After struggling for another week trying to get through to the IRS myself (and getting absolutely nowhere), I finally broke down and tried it. I hate admitting when I'm wrong, but wow - I was connected to an IRS representative in about 15 minutes. The agent confirmed I could file a simple amended return for my missed depreciation instead of the complicated Form 3115 route my accountant was suggesting. That single call saved me at least $600 in additional accounting fees and hours of paperwork. The rep even emailed me the specific publication sections that applied to my situation. Sometimes the direct source really is the best way to get a clear answer, especially with something as complicated as depreciation catch-up.

Just to offer a different perspective - I went through this exact situation last year and ended up filing Form 3115. It wasn't actually that bad! The form looks intimidating but if you're only dealing with one property and one year of missed depreciation, it's fairly straightforward. The benefit of Form 3115 is you can correct multiple years at once without having to file several amended returns. In my case, I had missed 3 years of depreciation and my accountant said Form 3115 was cleaner than doing multiple amendments. That said, if you only missed one year (2022), then yes, the 1040-X amendment route is probably simpler. But don't let Form 3115 scare you if that ends up being the better option!

One thing nobody has mentioned yet - make sure you've calculated your depreciation basis correctly! When converting from primary residence to rental, your basis for depreciation is the LOWER of: 1) Your adjusted cost basis (purchase price + improvements - land value) 2) The fair market value when you converted it to rental use I made the mistake of just using my purchase price when I should have used the FMV at conversion (which was lower in my case during the 2018 market dip). Had to redo everything! Also, are you planning to do the amendments yourself or using a tax professional? With rental property sales and depreciation recapture, it might be worth paying for professional help just for this year.

I went through this exact same situation last year - bought a home, lived in it, then converted to rental and completely missed the depreciation in my first year. The stress is real! Here's what I learned: You're absolutely right to want to avoid Form 3115 if possible. Since you only missed one year (2022) and you're still within the 3-year amendment window, filing a 1040-X is definitely your best bet. I did the same thing and it was much more straightforward than I expected. A few things to keep in mind: - Make sure you calculate your depreciable basis correctly (as Nia mentioned above - it's the lower of cost basis or FMV when converted) - You'll want to amend 2022 first, then 2024 if you've already filed the sale - Keep good records of everything for when you calculate the depreciation recapture The good news is that even though you didn't claim it, you would have owed recapture tax anyway since the IRS considers depreciation "allowed or allowable." At least by amending, you'll get the tax benefit you should have received in 2022. Don't let this drive you too crazy - it's a common mistake and totally fixable with amended returns!