Depreciation Question?

10 Replies

If I buy a property in December, will I be able to claim the full depreciation on it for that year? Is there a timetable on how long I have to own it in order to claim this tax advantage?


If you buy a property in December, you will be able to claim 1/2 month's worth of depreciation on the building and 1/2 year's worth of depreciation on any personal property that went along with the building.

Oh wow. Didn't think about the personal property Logan. This info helps tremendously and shows me the impact of buying in December vs January of a year.


On the personal property if you buy more than 40% of the total amount of personal property for that year in the 4th quarter the depreciation convention changes to the Mid quarter convention method of figuring depreciation.  

@Scott Vance is correct.  An important point to note is that the mid-quarter convention applies at the taxpayer level and not the property level.  So if you were placing personal property in service throughout the rest of the year, you will likely avoid the midquarter convention.  But if this is, say, your first rental, then the midquarter convention will apply if you place all the personal property in service in December.

For the personal property aspect of your purchase, you would have the option of accelerating the depreciation using Section 179 if you chose to do so, which would allow you to expense up to the entire cost of the asset in one shot to the extent that you have taxable income (it can not cause a loss, where normal depreciation can). 


@Logan Allec  Yes very true, and a good point about the mid-quarter convention applying at the tax-payer level and not the property level. 

This information is excellent . Thank you all so much.

@Mac Usher

Don't overlook the most important point in this thread.  Depreciation does not start on your date of purchase, it starts on the day you put the property in service as a rental.  Just buying in December does not automatically give you any depreciation expense for December.

These guys are too good. Don't forget to check out the de minimis safe harbor rules though. Hadn't seen that brought up yet. It's not section 179 but it can come in handy.

@Jon S

The §179 deduction is not available for rental property.  IRC §179 specifically excludes personal property used in a residential rental property activity. 

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