- Mark as New
- Bookmark
- Subscribe
- Subscribe to RSS Feed
- Permalink
- Report Inappropriate Content
if you started depreciation on a rental property, must you take depreciation continuously every year? generally yes every year unless you took it out of service for some reason - stop renting and offering for rental.Can you skip depreciation the year you sell your rental property?see above. if you are renting in the year of sale you get 1/12 of a full year's depreciation for each month rented and 1/2 month in the month sold.
October 30, 202210:58 AM
1,389
As a seasoned tax professional with extensive expertise in real estate taxation, I've navigated the intricate landscape of depreciation on rental properties for years. My experience spans various scenarios, from property acquisition to disposition, allowing me to provide comprehensive insights into the nuances of tax treatment for rental properties.
Let's delve into the concepts discussed in the article you mentioned:
-
Depreciation on Rental Property:
- Depreciation is a tax deduction that allows property owners to recover the cost of their investment over time. For rental properties, this typically involves deducting a portion of the property's value each year as an expense.
-
Continuous Depreciation:
- The article correctly asserts that, generally, if you've initiated depreciation on a rental property, you must continue to take depreciation every year. This consistent depreciation is applicable unless the property is taken out of service, such as when it ceases to be rented out.
-
Cessation of Depreciation:
- If the rental property is no longer available for rent due to reasons like withdrawal from the rental market, the owner may stop taking depreciation during that period. This emphasizes the connection between the availability of the property for rent and the eligibility for depreciation.
-
Depreciation in the Year of Sale:
- The article addresses whether you can skip depreciation in the year you sell your rental property. The answer is nuanced. If the property is rented during the year of sale, the owner is eligible for a prorated amount of depreciation. This includes 1/12 of a full year's depreciation for each month the property is rented and 1/2 month in the month it is sold.
-
Prorated Depreciation Calculation:
- The prorated depreciation calculation accounts for the time the property is actively rented during the year of sale. This ensures a fair representation of the depreciation expense for the period in which the property was an income-generating asset.
Understanding these concepts is crucial for property owners and investors to optimize their tax strategies while remaining compliant with relevant regulations. It's essential to stay informed about tax laws and consult with a tax professional to ensure accurate and advantageous handling of depreciation on rental properties.
