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What are the implications of skipping a year in the depreciation of a piece of rental real estate?

You paid too much tax in that year.

When I eventually sell the property years in the future, will the IRS compute the taxes owed on depreciation strictly based upon the year that I began depreciating it even though I skipped a year in claiming depreciation?

<grinning> If the IRS computes the taxes, they'll compute it on the full sales price. They have no idea what you paid for the property. So the depreciation won't matter. </grinning>

So when YOU computer your taxes for that year, you must treat it as if you did take the depreciation. So you would lose out on any benefit from that year's worth of depreciation.

If so, can I file an amended 1040 for tax year 2001 to claim the depreciation.

You have 3 years from the due date of the return to amend it. For 2001 returns, that means you have until April 15, 2005 to file an amended return.

Realizing that it is to my advantage to depreciate the property every year in the future, do I just jusmp back into the original depreciation schedule begun in 2000? If so, do I count 2002 as yeat two or three of the depreciation?

Treat it as if you took the depreciation. In your example, you'd be at year 3 of the schedule. And you are going to amend that return, so you really did take the depreciation, even if it was a bit late.

--Peter <== Wondering what's up with depreciation today. This is the 3rd question on 3 different board I've answered about depreciation.
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