Rental Depreciation

[jrfitz]

Client had a rental property for 4 years and then moved back into rental for 2 years then turned it back into a rental again. What do you do with the depreciation from before? Or do you just start over with the depreciation? I can't seem to find an answer to that question.

[ATSMAN]

Depreciation is suspended when the property was taken out of rental. It starts back again where it left off when it is put back in rental again.

[TaxGuyBill]

If I'm interpreting ATSMAN's response correctly, I view it the opposite way.

I think you need to re-start the 27.5 years, using the Adjusted Basis (which accounts for the prior depreciation).


I was indecisive on this matter for several years, but now I definitely lean towards re-starting the 27.5 years. However, I have never seen any clear, pointed answer to this question.

[Dude]

If I'm interpreting ATSMAN's response correctly, I view it the opposite way.

I think you need to re-start the 27.5 years, using the Adjusted Basis (which accounts for the prior depreciation).


I was indecisive on this matter for several years, but now I definitely lean towards re-starting the 27.5 years. However, I have never seen any clear, pointed answer to this question.

So the 4 years of depreciation taken is never recaptured?

[TaxGuyBill]

So the 4 years of depreciation taken is never recaptured?

I never said that. The first 4 years of depreciation still lowers the Basis. If the property is sold for more than the Adjusted Basis (which includes the reduction of Basis from the first 4 years), there will be Unrecaptured Section 1250 Gain that will be taxed, including the gain based on first 4 years.