Anyone know depreciation 27 or 39 yrs for mixed use Apartm/Office

6 Replies

Apartment and office 50% - 50% building

does anyone know if we have to do 27.5 yrs for residential and the typical 39 years for commercial for depreciation?

Or is it 100% commercial so 39 yrs?

And we can still do cost segregation on fixtures and things like 7 yrs for door, 8 years for floors, etc for speeding up the depreciation right?

@Susan O.

You'll need more of a tax-specialist for question 2.

As to question 1, the depreciation schedule for commercial property is now 40 years and residential is 30 based on the 2017 tax code changes.  The mixed use property would fall under the commercial category.

@Brian Eastman "As to question 1, the depreciation schedule for commercial property is now 40 years and residential is 30 based on the 2017 tax code changes. The mixed use property would fall under the commercial category."

The TCJA preserved the GDS recovery period of 39 years for commercial real property and 27.5 years for residential real property.

There were 'versions' of the bill in which this was changed but the version that was passed did not have those provisions.

Originally posted by @Susan O. :

Apartment and office 50% - 50% building

does anyone know if we have to do 27.5 yrs for residential and the typical 39 years for commercial for depreciation?

Or is it 100% commercial so 39 yrs?

Susan, the definition for depreciation in this case of a mixed-use building actually has to do with the income produced, and not the sqft. split. There is an 80/20 rule. If 80% or more of the income comes from the residential than it isclassified as residential and depreciated over 27.5 years, otherwise it's classified as 39 years.

As per your second question, yes, you can still do cost segregation (accelerating depreciation).

Originally posted by @Brian Eastman :

@Susan O.

You'll need more of a tax-specialist for question 2.

As to question 1, the depreciation schedule for commercial property is now 40 years and residential is 30 based on the 2017 tax code changes.  The mixed use property would fall under the commercial category.

 Brian, you are right but there are two types of depreciation. I wanted to let you know that you were not entirely incorrect. 

1) ADS - what you are referring to. the new residential is down from 40years to 30  as you mentioned. The commercial is still 40. This system is elected if someone wants to slow down depreciation or sometimes is mandatory. 

2) GDS - it is unchanged as @Eamonn McElroy mentioned. 27.5 for residential and 39 for nonresidential.