Asset Returned to Service

[Kram BergGold]

In 1985 my client placed a home office into service. Depreciable Basis $25,000. Depreciated SL over 18 years. Depreciation was claimed for 6 years (total $7527). From 1991 through 2004 this space was used as part of taxpayer's home. Then on Jan 12,2005 the house became rental property. How do I depreciate this $25,000?

[solomon]

Guess

My guess would be to use the lower of FMV or adjusted basis as of Jan. 12, 2006 minus the previous depreciation of 7,527 for basis of depreciating the rental.

[outwest]

A clarification..

Lower of FMV or Adjusted Basis ($25,000-$7,527 = $17,473)

Adjusted basis is prior depreciation basis (1985) less depreciation allowed or allowable.

Doug

[Kram BergGold]

Thanks Doug

Doug, I was terribly confused by some regs the IRS put out in 2004 having to do with depreciation when assets change categories. Now I see these don't apply in this situation and your answer is correct.