Commercial Depreciation Option

[Nathan Amato]

I have a commercial property that is deeded commercial and it runs under a LLC. It's 3 floors. The first floor is rented to a retail store, the second is rented to a residential tenant, the 3rd floor is temporally unoccupied because of some construction that needs to be done.

Can I depreciate the whole building as commercial for 39 years? Or do I have to depreciate the portion for the retail store 39 years and the residential tenant portion 27.5 years. If so, how do I calculate that? I would prefer to do the whole thing at 39 years because the whole building is a commercial building and it would make accounting easier.

Look forward to some insight.

Thanks,

[Michael Plaks]

@Nathan Amato

You can treat it as commercial, as long as at least 20% of the total rental income comes from the store.