Depreciation for the converted property

2 Replies

Hi Folks,
Let's say I have a primary that I bought in 2000 and I started renting it out in 2010.
Question:
- is the depreciation calculation is started from 2000 or 2010 ?
- let's say by 2020, I want to change the method of calculating depreciation, meaning If I use the appraisal method, I found the depreciation number is higher rather than using the tax method which I've been using so far. Can I change the method of taking depreciation after so many years? is it allowed? if yes what's the mechanism? 
- when selling, is the IRS only checking schedule E depreciation item only? 
- In scenario where I move back to the house in 2020 live there for 5 years until 2025, and rent it again after 2025, how's the depreciation is calculated in this case ? will it continue from 2020 or a new fresh start ?

@Carlos Ptriawan

1. Depreciation starts in 2010

2. You depreciate the amount you paid for it in 2000. You seem to believe that you can depreciate the higher amount per appraisal, but you cannot. It does not matter what the property was worth in 2010 (unless it was worth LESS than what you paid for it in 2000.)

3. If there's some other reason to change depreciation going back to 2010, you can do it, but the procedure is complicated and requires professional help.

4. When you sell, you pay taxes on all depreciation you took between 2010 and the date of sale. You (your software or your CPA) calculate this amount on your end. The IRS does not know it unless you're audited. Then the IRS will make you prove your calculation.

Originally posted by @Michael Plaks :

@Carlos Ptriawan

1. Depreciation starts in 2010

2. You depreciate the amount you paid for it in 2000. You seem to believe that you can depreciate the higher amount per appraisal, but you cannot. It does not matter what the property was worth in 2010 (unless it was worth LESS than what you paid for it in 2000.)

3. If there's some other reason to change depreciation going back to 2010, you can do it, but the procedure is complicated and requires professional help.

4. When you sell, you pay taxes on all depreciation you took between 2010 and the date of sale. You (your software or your CPA) calculate this amount on your end. The IRS does not know it unless you're audited. Then the IRS will make you prove your calculation.

 Beautifully said.