Bonus depreciation - depreciation recapture after demolition?

Question

I just bought a property i was planning to rent it until i have time to get to it. My long term plan is just to rent it for a couple years, and then tear it down. If i claim bonus depreciation on it this year or next, does the depreciation recapture get reset on the bonus depreciation (since it does not include land value) after i tear it down? Listening to an accountant speak a couple years ago, i was told that when you get a new roof or new appliances, that essentially resets the recapture when bonus depreciation is taken.

Michael Plaks · Answer

@Sean H.

I do not recommend that you DIY taxes. You clearly listened/read enough tax information to make yourself confused. You use various tax terms but not correctly and without understanding the big picture. It's like trying to use the excavator from your profile picture without learning how to operate it. Why, let's just see what this lever does, shall we?

You don't claim bonus depreciation on the property. You might be able to use bonus depreciation on some specific components of this property: carpet, appliances, driveway, fence and so on. If you later demo the property, you do not recapture bonus depreciation on these items. Demolition has its special tax treatment however, and I would not tackle it without profession guidance.

Basit Siddiqi · Answer

You might be able to identify that the property is disposed of removing the accumulated depreciation.Not something easy to do. Talk to your accountant.

Bonus depreciation - depreciation recapture after demolition?

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