Culver City, CA · Member since 2015 · 28 posts · 3 votes
I have a duplex, i lived in the bottom unit and had a roommate. Top unit was rented. I calculated 4% of the building was used for the room rental. I depreciated this value the last two years. He moved out last year and I moved out as well so now I'm renting the entire building. I had started to use a SL depreciation on the room rental but after only taking 2 years of depreciation i have 25.5 years left.
How do I handle depreciation on the entire building now? even though I claimed 2 years worth on 4% of the building.
Which forms do I have to fill out and what is the process.
I ran into the exact same issue. My accountant handled it...so that is how I know the answer.
What will happen is you will treat the 4% of the building and the 96% of the building almost like two completely different depreciable assets. The 4% will continue depreciating on the schedule it is currently on (25.5 years left). The 96% will start depreciating this year on a 27.5 year schedule. It can get confusing...but this is the best way to handle this issue.
It sounds like you are doing your own taxes...which is completely reasonable if you can manage. However, if you have an accountant, please review the above tactic above to make sure he/she agrees.
So even though the room renter moved out and I moved out I should still depreciate it on it's own schedule?
The duplex is a 2/1 top and 2/1 bottom. The bottom is now completely rented out to new tenants. So the room that was being rented before, is now being rented by a new tenant, (Since the entire bottom is now being rented). Isn't that double dipping if I'm claiming depreciation on the room rental(when I lived in the building and renting it out) and also depreciating the bottom unit as a whole?
Thanks so much for your help on this!!! The cost basis of the bottom unit is now changed since putting it in service last year as well. Correct?