Many years ago the deprecation rate was selected at the time of placing the property in service. The owner could select straight line, accelerated, as well as many more options. The Buyer could even select how long the straight line deprecation would be.
Those days are now gone. The IRS only allows deprecation of rental property. This infers that there is rental income. Residential real estate that is not rental property cannot be deprecated. If the residential rental real estate is qualified to be deprecated, the IRS allows only straight line deprecation over 27.5 years. This means that the cost of the property is depreciated over 27.5 years, which, expressed as a percentage, equals 3.636 percent of the cost a year. You take the cost of the property and divide it by 27.5 to get the amount that is allowed for deprecation each year.
When purchasing investment property, talk to your CPA/ Investment advisor to determine if you should increase the price and let the Seller pay the fees to close, You may be better off paying a lower price and paying the Seller fees. Acquisition costs may be calculated differently than depreciation on your tax return. Your investment strategy and your Realtor will guide you through the process.
This information is not meant as tax advice. It is only information as determined by the writer. Everyone should seek professional advice from their own trusted source to be sure that their actions are in their best interest. This writer always suggests that a purchaser seeks competent legal and tax advice from their CPA and attorney.
New Web Sites:
Please contact me immediately if you know a person that cannot make their mortgage payments. I will work with them to avoid foreclosure or bankruptcy at no charge or fees to them.
Steven Goldman, CRS
Certified Distressed Property Expert (CDPE)
Certified Default Advocate (CDAT)
Certified Short Sale Professional (CSP)
GRI, ABR, SRES, CNHS, PM, CCI
Realty One Group
10750 W. Charleston #180
Las Vegas, NV 89135
Consulting an accountant is the answer......
Hank Lauzon III
Exit Las Vegas Realty Center
6600 W. Charleston #119
Las Vegas, Nv 89146
Web : http://www.HanksLVRealestate.com
Never look down on anybody...unless you're helping them up.