Does the capex depreciation follow a new owner?

Question

Hello!

So my question is , lets say a property had a capital expenditure which they were allowed to depreciate over 15 years. 5 years later the property is sold to me.

Do I inherit the next 10 years of depreciation tax benefits from the cqpital expense of the previous owner?

Chris Soignier · Answer

The IRS doesn't care if your depreciable assets are brand new or a century old - you get the same depreciation schedule upon acquisition.    Base is 27.5 years on houses (longer IIRC on commercial, but you can Google it as easy as I can).   There's also opportunity to do cost segregation and depreciate some items, like new carpeting, on a faster schedule.

You depreciate your cost basis, which to keep it simple is your cost plus subsequent capex less accumulated depreciation.    Note that I'm not a CPA, but know just enough about accounting to be dangerous.    ;)

Chris Soignier · Answer

No - depreciation schedules start over whenever a property changes hand.

Kevin Schulte · Answer

Oh great! Sounds like upside! So again hypothetical expenditure and the tax man says I can depreciate over 15 years. In the above example I get to restart the clock when I take the property? Am I using the price as if Id purhased new or do I have to use some generic comp number that the IRS has oayed for suh situations?