I am wondring is there anything that would increase the basis of rental property that is not depreciated or is not required to be depreciated. For example if you change the ac unit, the basis is increased however the cost associated with it is depreciated. Also, the sale of rental property is reported on 4797?
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Well, the portion allocated to land is not depreciated.Yes.Originally posted by ardi600 View PostRoland Slugg
"I do what I can." -
Air Conditioner Comment
You should consider depreciating this building by components. The components have depreciable lives that are less than the 39 years of the building.
It requires some work, but should be well worth it. If a turnkey building of $300,000 is depreciated over 39 years, this is some $7600 per year. Suppose instead that this includes $30,000 in HVAC, $20,000 in furnishings, $15,000 in computers or equipment,
then only $235,000 must be depreciated over the 39 years, and much more rapid depreciation is allowed for the components.
And let us not forget "Leasehold Improvements" which are paid for by the lessee and are depreciable by the lessee. Can be big time savings.
More recordkeeping, also if any of the components are disposed separately from the building, then their disposal should be reported on Form 4797.Comment
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