La Quinta, CA
(760) 895-3516

Thursday, April 30, 2015

Arizona Rental Depreciation Recalculation and Addition to Gross Income

Many Canadians have rental properties in Arizona or vacation real estate that is rented out for part of the year. Every year, we help those from Canada file federal income tax returns and Arizona state income tax returns for AZ royalty and rental sources of income and there is sometimes a question when it comes to depreciation of property.

Adding and Recalculating AZ Depreciation

Recalculating Arizona Rental depreciation gets a little confusing when working with computer software as the amount of depreciation that has been claimed on your Federal income tax return is added in line 28 of 140NR.

Here is a quick overview to help you figure the correct amount of depreciation allowable by the state of Arizona. 

  • Line 28 of 140NR adds total depreciation included in AZ gross income
  • Line 37 is where to enter the recalculated AZ depreciation

Recalculating the Allowable Arizona Depreciation 

  • Was the asset placed in service before Dec 31, 2012? 
    • Enter depreciation as if you had elected not to claim bonus depreciation
  • Was the asset place in service between Dec 31, 2012 and Dec 31, 2013? 
    • Entries depend on method of depreciation
  • Was the asset placed in service after Dec 31, 2013? 
    • Enter depreciation as if 10% bonus depreciation was used (usually it would be 50% on Federal)
Borders Bookkeeping prepares federal and state returns for rental income in Arizona. For Canadians, our flat rate fee is $250 for state and federal (1 rental unit). Contact us today and we will be happy to help.

(760) 895-3516