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Updated over 9 years ago on . Most recent reply presented by

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Michael DiFranco
  • Commercial Real Estate Broker/Investor
  • Willoughby, OH
1
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How is property depreciation/basis affected after a fire?

Michael DiFranco
  • Commercial Real Estate Broker/Investor
  • Willoughby, OH
Posted

I am trying to sell a commercial investment property and am wondering the tax implications.

Here is the example.

I had a long term tenant, 40 + years.  Original Value of Building in 1970 was like $500k.

In 2007 there was a fire and the building was a total loss and I rebuilt the building 8 years ago after a fire.

If i am planning selling the building how is my basis factored?  Will all the depreciation i had written off the past 33 years prior to the building burning down essentially up in smoke?

Thanks!

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Brandon Hall
  • CPA
  • Raleigh, NC
2,286
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Brandon Hall
  • CPA
  • Raleigh, NC
Replied

@Ned Carey you are correct, it is not considered income unless the insurance payout received exceeds your basis in the property.

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