OIH depreciation recapture

[JoshinNC]

Client has been taking depreciation as part of OIH deduction (although none has been deducted as Sch. C income was always less than $0). Client indicates that in 2010 the OIH ceased to be used solely for business, so we need to stop taking the deduction. My question is this, do we recapture the previous depreciation in 2010 due to ceased use as OIH or wait until property is sold? Can't find any specific reference to this anywhere, so if anyone can point me in the right direction I would greatly appreciate it.

Thanks in advance!

[jimmcg]

Client has been taking depreciation as part of OIH deduction (although none has been deducted as Sch. C income was always less than $0). Client indicates that in 2010 the OIH ceased to be used solely for business, so we need to stop taking the deduction. My question is this, do we recapture the previous depreciation in 2010 due to ceased use as OIH or wait until property is sold? Can't find any specific reference to this anywhere, so if anyone can point me in the right direction I would greatly appreciate it.

Thanks in advance!

My understanding is recapture on sale not cessation of use. Don't have a cite without taking the time to research the applicable regs. Have been know to be wrong so check the regs!

[taxxcpa]

Allowed or allowable.

The depreciation was never allowed or allowable. So, would it ever be recaptured, even when selling the home?

[JoshinNC]

It will be allowable at the point the TP's Sch C becomes profitable

so I would think it would still be subject to recapture at some point.

[ChEAr$]

so I would think it would still be subject to recapture at some point.

And I would think the tax benefit rule would come into play.

[Gretel]

And I would think the tax benefit rule would come into play.

Yep, agree with Haensel.

Only needs to be recaptured up to the amount of benefit received.