I booked the Isleta rehab costs into the wrong year and my depreciation basis is now wrong

The good news is you have not filed yet, so this is a bookkeeping correction inside an unfiled return, not an amendment to a filed one. That changes the stakes considerably.

The core issue sounds like a placed-in-service date problem. "Placed in service" means the property was ready and available to use for its intended purpose. If the rehab work finished in February and you placed the property in service in March, then depreciation starts in March, full stop. The year the bookkeeper recorded the materials payment is a separate question from when depreciation begins.

On the $6,200 specifically: whether those costs belong in November or December depends on your accounting method. Cash basis means you record when you paid. Accrual basis means you record when the obligation was incurred. Your bookkeeper may have recorded on accrual while you expected cash, or simply booked to the wrong period by mistake. Either way, since the property was not placed in service until March, those rehab costs are capitalized into the depreciable basis of the property, not expensed in the year you paid for materials. So the timing of the materials entry matters less than making sure they land in the basis correctly.

What the clean fix looks like is: correct the journal entries to reflect what actually happened, set the depreciation start date to March, and build the schedule from there. Since the return is unfiled, your CPA is correcting a draft, not amending something the IRS has already seen.

I want to be direct here: the disclosure and basis questions are tax questions, and I am not a tax professional. Your CPA needs to confirm whether any of this triggers a disclosure requirement, because that answer depends on facts I cannot see.

One thing worth reviewing with your bookkeeper going forward: who owns the placed-in-service date, and does it get confirmed before the depreciation schedule is built?

What accounting method did you set up with your bookkeeper at the start?

The placed-in-service date controls everything here, and that date is March, full stop.

The assumption doing the most work is that the $6,200 lands in the depreciable basis at all.

Materials purchased before placed-in-service date do fold into the cost basis when they are capital in nature, so the timing error may be less damaging than the categorization question underneath it. If any of that $6,200 is consumables or repairs that would be expensed under Sec. 162 once the property is operating, reclassing the entry corrects both the year and the character simultaneously, and the depreciation schedule never should have touched it. If it is genuinely capital, the reclass moves it from a 2023 expense into the 2024 basis, your depreciation start date shifts to March when the property was actually placed in service, and the prior-year return either was never filed with the wrong treatment or gets corrected before you file. Since you are on extension and unfiled, you are not amending anything, you are simply filing correctly the first time, which is a cleaner position than it sounds.

The disclosure question turns on whether a prior-year return went out with the wrong basis already baked in. If yes, a 3115 or a 1040X is a licensed-professional conversation and I would not characterize it further here. If no prior return captured this, there is nothing to disclose because the error never became a filed position.

What did the bookkeeper book the $6,200 as, expense or a capitalized addition to the asset account?

Reclassing a journal entry before the return is filed is not the same animal as amending a depreciation schedule after, so the disclosure question is probably moot if you move fast.

The number that matters is what date your bookkeeper used and why, invoice or payment, because that tells you whether this is a methodology problem that will repeat or a one-time misread.

What does the depreciation schedule actually show as the placed-in-service date right now?

$6,200 is small enough that the reclass itself isn't what concerns me, it's whether your CPA built the depreciation schedule off a March placed-in-service date already or off the December booking, because those are two different problems with two different fixes. If they used December, you've got phantom depreciation running for three months on a property that wasn't ready, and that's the number that has to move, not just the journal entry. I had a similar situation on a Columbus duplex where the bookkeeper front-loaded renovation costs into the prior period and the schedule came out wrong by about four months of depreciation, and the fix was genuinely just a reclass and a corrected schedule before filing, no amendment, no disclosure trigger, nothing dramatic. The return wasn't filed so there was no prior-year position to defend. What method is your bookkeeper actually on for this property, cash or accrual, because if they're running accrual and booked on invoice date rather than completion date that's a workflow problem that will happen again next November.

Since you're still on extension, your CPA is correcting the return, not amending it.

The cleanest path is a correcting journal entry that moves the $6,200 out of the December period and into the capitalized cost of the asset, timed to the actual placed-in-service date in March. Because you have not filed yet, there is no amended return and no disclosure trigger, so this is a bookkeeping correction inside an open period, which is a different and much smaller problem than it would be post-filing. The depreciation schedule then starts from March with the correct basis, and the work your CPA does is mechanical rather than explanatory. What I would pin down before that conversation is whether the $6,200 is purely materials or whether any portion covers labor or contractor fees, because that changes how a cost segregation study would treat it later if the property ever justifies one, and misclassifying components at the basis stage compounds forward every year.

The accrual versus cash question matters here in a specific way: if your books run on accrual, the bookkeeper may have recorded the materials when invoiced rather than when the work was substantially complete, which is actually the right trigger for capitalization under accrual accounting. If that is the case, the entry was not wrong because it hit December, it was wrong because it hit an expense account rather than work-in-progress or a construction-in-progress asset account. The placed-in-service problem and the accounting method problem can look identical on the surface but require different correcting entries. Which method are your books on?

What method did your bookkeeper use for the whole file, cash or accrual?