eg_all[at]yahoo.com wrote:

- quote -

No, neither calculation is correct. As at least one other
reply states, you use the purchase price of the building,
not the assessed value. Relationship of assessed value to
actual market value varies greatly from state to state.

You must allocate the total purchase price between the
various elements of the purchase. Thus, if you want to
depreciate the appliances, you must allocate a part of your
purchase price to those assets.

Lanny K. Williams, CPA
Nawarat, Williams & Co., Ltd.
Income Tax Services for Expatriate Americans

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veg_all[at]yahoo.com writes:

- quote -

Don't use the assessed value of the building. There's no
guarantee that figure will be even remotely correct. You
have to use the portion of your actual purchase price that
was for the building.

Also, residential real estate follows the mind-month (MM)
convention with respect to in-service date. So even if you
placed the property into service on August 1, you are
treated as having placed it into service on August 15. So
you probably only have 3.5 months of depreciation, not 4
months.

- quote -

Yes. Every full year of depreciation will be the same
because it is straight-line for residential real estate.

- quote -

Appliances are in the Half-Year convention, which means you
take a half-year of depreciation in the year they were
placed into service regardless of when they were placed into
service.

In any event, the table in Pub 946 already has the half-year
convention built into it. In other words, the 20% factor
already reflects the fact that you only get depreciation for
a half-year. So your depreciation is FMV * 20%.

--
Rich Carreiro rlcarr[at]animato.arlington.ma.us

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<veg_all[at]yahoo.com> wrote

- quote -

Don't use the assessed value unless it's lower than your
purchase cost basis, but your cost basis.

Then it's cost basis divided by 27.5 times 4/12.

- quote -

It's common to show losses from depreciation alone. Your
rent needs to be what the market will hold.

--
Paul Thomas, CPA
paulthomascpapc[at]bellsouth.net

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I bought a new condo and rented it out for 4 months last
year . Are my depreciation calculations below correct:

1) property depreciation = ( 4/12 ) * assessed value ( from
prop. tax bill not including land) / 27.5

I assume for subsequent years the deduction will be the same
since I am using straight line method ?

2) appliance deduction:

(the new condo came with stove, fridge, microwave, furnace,
dishwasher). So I just looked up fair market value for these
items and calculated despreciation as:

4/12 (farir_market_value) * 20% (from IRS table based on
5-year 200% double declining method)

Are my number correct? I notice the depreciation from the
structure is quite high and results in me hardly paying much
tax. Is this common for most rental properties or am I just
charging too little rent?

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >