Claim Depreciation on "Subject to" Property
Hi BP! I am in need of any advise that anyone can provide. I understand most are not attorney's or tax professionals so I will not hold anyone too whatever they share as if that were the case. I purchased a property subject to the existing mortgage in late 2021. If I am able to claim depreciation for this property, do I claim that I purchased the property with the cash that I brought to closing for the seller or do I claim that along with the then loan balance once I had assumed the mortgage? Any advice, whether it be legal or personal experience, would be greatly appreciated.
@Marquest Page depreciation is based on purchase price. That would be cash plus remaining loan balance. I assume your purchase contract and title work would have the total dollar amount on it. I doubt you actually assumed the mortgage, because that would mean it transferred to your name. You are probably just paying the mortgage and it remains in the sellers name. You will have to be careful on the interest. Normally you would get an interest paid statement at tax time, called Form 1098. I am assuming you want to claim interest expense, so make sure you have mortgage statements and checking account or cancelled check. You will want to keep both the statement and proof showing funds were paid by you.
Was the property rented in 2021, because if it was not in service as a rental, you will not state claiming expenses until 2022. You can't claim expenses without rental income.
