Question

Can someone help me find depreciation?

Charlotte’s father, Patrick died on August 20, 2015, leaving Charlotte his entire estate. Included in the estate was Patrick’s house (1761 Bridge Street, El Paso, TX 79901). Patrick’s basis in the residence was $66,000. The fair market value of the residence on August 20, 2015 was $171,000. Charlotte has held the property as a rental property since she received it and has managed it herself, however she is not a real estate professional. To compute the depreciation on the house, Charlotte has allocated $15,000 of the property’s basis to the land and the remaining amount to the house. She has depreciated the house using the MACRS rules and conventions applicable to residential real estate. Charlotte has collected $1,500 per month all year (12 months) for 2018. The house was occupied during the entire year. She did not pay anyone that would require form 1099 for work related to this house. She incurred the following expenses related to the rental house during the year: Property Insurance $2,950 Property Taxes $3,920 Maintenance $1,670 Depreciation To be computed

Answer 1

the FMV of the property (less the value of land ) on the date of inheritance,ie. August 20, 2015 will be the basis for the house.

Also, the house is considered "placed-in -service " in the month of August

& a further 27.5 yrs. Depn. Is available from this date of inheritance, ie. Aug. 20, 2015.

& rates as per the following table are applcable.

Link which I used---http://www.uky.edu/~dshuls00/phtax/Appendix_C_2018_Ed.pdf

Details taken from the table for identification purpose:

TABLE 7

General Depreciation System—MACRS

Residential Rental Real Property Placed in Service After 12/31/86

Applicable Recovery Period: 27.5 Years

Applicable Convention: Mid-Month

Applicable Depreciation Method: Straight Line

The depreciation rates are --as in Col.numbered 8 (for August)

1.364% & 3.636% for most of the foll.yrs.--- 3.637% for some & ending in 0.455% for yr. 29.

Basis of the house for depreciation (as given in the question)

171000-15000=

156000

Year	Depn.%	Depn.Amt.
1	1.364%	2127.84
2	3.636%	5672.16
3	3.636%	5672.16
4	3.636%	5672.16
5	3.636%	5672.16
6	3.636%	5672.16
7	3.636%	5672.16
8	3.636%	5672.16
9	3.636%	5672.16
10	3.636%	5672.16
11	3.637%	5673.72
12	3.636%	5672.16
13	3.637%	5673.72
14	3.636%	5672.16
15	3.637%	5673.72
16	3.636%	5672.16
17	3.637%	5673.72
18	3.636%	5672.16
19	3.637%	5673.72
20	3.636%	5672.16
21	3.637%	5673.72
22	3.636%	5672.16
23	3.637%	5673.72
24	3.636%	5672.16
25	3.637%	5673.72
26	3.636%	5672.16
27	3.637%	5673.72
28	3.636%	5672.16
29	0.445%	694.20
	99.99%	155984.4