Sale Of Rental Part Personal

[GTS1101]

Hi,

I have a client that converted a home to a rental in 2005 and used it for only 75% of the year as a rental in 2005 so I calculated their depreciation based on 75% of their adjusted cost basis. In 2006 they used it 100% as a rental property and then sold it in late March 2006. They made some improvements on the house in early 2006. When I calculate the sale how do I figure out the adjusted cost basis? Is it 75% or 100% cost basis? I am assuming 100% because that is the purpose of the property was to rent it out 100% of the time and that is what they did in 2006. Do we use an average? Or what happens to the basis and depreciation when your business percentage changes from year to year? Thanks for your help!

GTS1101

[solomon]

Just because

it was not rented the entire year in 2005 would not have precluded 100% of the lower of the adjusted basis or fmv. I assume it must have been converted to a rental around April of that year. Property taxes would had to be prorated for 2005 and depreciation taken on 100% of the basis for nine months. Business percentage does not change year to year with a rental. Either it is a rental or it is not. Vacant rental time only reduces income - not the expenses.

[jainen]

Never mind

>>Thanks for your help!<<

Never mind our help. Do you have an asociate who can go over your numbers with you? Your post has many errors in theory. Real estate depreciation is mid-month convention so it automatically adjusts for the time it is not in service.

[GTS1101]

Sorry! Your right

I don't know what I was thinking in 2005. You are right. The depreciation should have calculated based on the month I put in for beginning of service date. The mid month would have calculated the correct depreciation. I don't know why I used 75%. I have to go back and review. Sorry I feel so embarrassed. I know better as I have been doing taxes for over 12 years. Thanks for helping me to see my error.

GTS1101

[JG EA]

Perhaps there was a 25% other owner in the first year? And that's where you got the 75%?

[jainen]

outdoor parties

>>I disclaim that I deny or repudiate any interest<<

Hey JG, did you know that when you change your signature line it changes all your prior posts too?

I'm still wondering about polluting the shades of Pemberly. Do you suppose that refers to:
a) the fine furnishings
b) spirits of family ancestors
c) the surrounding park
d) their reputation or mystique
e) outdoor parties

[JG EA]

absolutely D

Although it is just a feeling not scientific. By the way I usually hate sequels but there is one that wasn't awful. Pemberley Shades by DA Bonavia Hunt. Written in 1949 or so. 1st or 2nd google pick.

Yes I did find out that signatures change. But that isn't awful either, because when I pick one that I think is uproarious, well usually in a day or two it just seems - well, not uproarious.

[jainen]

from the last

>>absolutely D <<

Nope. I made that one up myself. Gotcha!

from the last page of the book: "she [Lady Catherine] condescended to wait on them at Pemberley, in spite of that pollution which its woods had received, not merely from the presence of such a mistress, but the visits of her uncle and aunt from the city."

[JG EA]

I stand* corrected - think I'll read it again!


*not a tree reference

[jainen]

safe in its obscurity

>>one that I think is uproarious<<

By the way, I thought your bit about balancing the form was pretty good. I didn't want to say so over there, because I've been posting in that thread since Saturday night and I keep getting beat up. Hopefully this one is safe in its obscurity.

[S T]

Nope

Not a prayer Jainen, some of us are on to you now! However, I did like JG's post on the other thread as well!

Sandy