How does depreciation work if you rent the property years after buying it?

Question

Hi,

Situation:

Bought condo in 2019 for $238k and made $10k of repairs over 4 years.

Rented out the condo (valued at $310k) in 2023 (this year).

Question:

What would the total value be that I get to depreciate over the next 27.5 years? I am confused if I only get to deduct based on the original purchase price, or the current value of $310k when I start renting it? Do past repairs come into play anywhere also?

Ashish Acharya · Answer

238k + improvement (not repairs) less value of land over 27.5 years stating in 2023.

Linda Weygant · Answer

When placing a prior purchased asset into service, you must use the lower of original cost or market. For you, that's going to be cost.

Whether that $10,000 can be included in that depreciable basis depends on whether those expenses are classified as a repair or as an improvement.

The property is then depreciated over 27.5 years, although there are some instances where that life could be 39.

Best of luck to you!

Devin Keener · Answer

Thank you!

How does depreciation work if you rent the property years after buying it?

How does depreciation work if you rent the property years after buying it?

Most Popular Reply

4 Replies