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Depreciating Residential Rental and Commercial Real Property: Surprises

January 24, 2022

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with all the details…

What’s the Holy Grail that taxpayers seek?

Depreciation.

Why?

Because as you probably know, depreciating an asset over time can reduce your tax bill. What you may not know is that…

All real property is not created equal.

Here’s the difference:

You can depreciate residential real property (like an apartment building)

over a much shorter time period

than non-residential real property (like an office building).

And time is money.

The tax code assigns a certain amount of time, called the “recovery period,” during which you can depreciate your real business assets.

The longer the recovery period, the less you deduct each year.

And this can add up to a lot of money.

Here’s the important point.

This whole subject of real property depreciation is complex and you need to get into the weeds (even if it’s a bit unpleasant), and understand the issues involved.

For example, you’ll need to know:

  • When is a building with a store and apartments is a 100% residential building for tax purposes?
  • When can a building contain no kitchens in the units but qualify for faster residential depreciation?
  • What is a tax code defined “transient” and how does this create residential or commercial depreciation?
  • How do you depreciate a building when the classification changes from commercial to residential because you raised the rent on the apartments?
  • And much more

Need an expert guide to explain all this and more? When you come to the Tax Reduction Letter you’ve come to the right place as you’ll discover when you…

CLICK HERE and get the complete article…

“Depreciating Residential Rental
and Commercial Real Property:
A Crucial Difference”

Filed Under: Depreciation, Filing tips, Investments, Rental Properties, Tax Planning, Tax Policy

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