Depreciation

[Rob White]

I always thought of depreciation as 27.5 years following the date the building was constructed. I was in discussion with a friend and we couldn’t definitively say if it was 27.5 years from construction or if it resets when you buy a property.

For example: I purchase a residential rental property which was built in 1965. Can i depreciate it for the next 27.5 years, or can I NOT because its more than 27.5 years old and the depreciable time has past?

Thanks for your help, Rob

[Brandon Hall]

Jonathan West the logic is that you invested in an income producing asset and you should be able to recover your cost over the life of that asset. When you buy a property, you are going to realize benefits for a number of years so you should be able to "expense" the cost over a number of years. On the other hand, when you buy supplies, you realize the benefit in the current year, so you expense it in the current year.

Additionally, the tax break is an incentive to invest in real estate and make our neighborhood nicer.

But yes, every time you place a property into service the depreciation resets.