It seems that Pralana does not calculate depreciation expense on a rental property. It's not reflected in rental income nor in the tax form (Schedule E).
Usually, it's the biggest operating expense and often results in a net loss. I only see rental income minus operating expenses, excluding depreciation.
So my taxes come out too high. Does anybody have experience or a workaround for this issue?
@rmweissmac-com Pralana does model depreciation on rental property. On the Build > Expenses > Rental Property > Rental Property Info page, did you specify the Depreciation Period and Improvement Percentage? If you leave either of these blank, there will be no depreciation modeled.
Stuart
Got it. Thanks! I did specify the depreciation period but left the improvement % blank. After playing around with the latter number, I found that 85% resulted in the depreciation figure from last year's tax return. But why does it need the improvement % number? Isn't depreciation calculated based upon 27.5 years and the purchase cost plus improvements? I did not do any improvements to the rental property.
@rmweissmac-com It needs the improvement percentage to eliminate the value of land from the depreciation calculations. In this case, "improvements" refers to anything over and above the raw land.
Stuart
Makes sense. Thanks.
