Depreciation commercial


A

awp west

Hi, I have a small retail building with the outside shell built in
December 2006. The inside was completed in July of 2011 and rented in
August of 2011. When can the depreciation start? and can all the
tenant improvements for the inside paid by the landlord take an
accelerated depreciation schedule like 15 years or ? Thanks a lot!
 
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R

removeps-groups

Hi, I have a small retail building with the outside shell built in
December 2006.  The inside was completed in July of 2011 and rented in
August of 2011.  When can the depreciation start? and can all the
tenant improvements for the inside paid by the landlord take an
accelerated depreciation schedule like 15 years or ?  Thanks a lot!
Depreciation starts when the retail building was available for rent,
which will likely be shortly before when it really started renting.
Available for rent means it's ready for businesses to move in, and
you're probably advertising that is available (even though the ads may
be free like on craigslist).

BEGIN QUOTE http://www.irs.gov/publications/p946/ch04.html#en_US_2010_publink1000107522

What Is the Placed in Service Date?

You begin to claim depreciation when your property is placed in
service for either use in a trade or business or the production of
income. The placed in service date for your property is the date the
property is ready and available for a specific use. It is therefore
not necessarily the date it is first used. If you converted property
held for personal use to use in a trade or business or for the
production of income, treat the property as being placed in service on
the conversion date. See Placed in Service under When Does
Depreciation Begin and End in chapter 1 for examples illustrating when
property is placed in service.

END QUOTE

But if you have a business that buys property, renovates them, then
rents them out, it seems depreciation ought to start when you purchase
the item, and depreciation on each capital improvement starts when you
did the work. I'm sure that's what big commercial companies do.

I have no idea what inside and outside shell are, but property that is
part of the main property, that is attached to it, is depreciated the
same as the property itself. Looks like commercial property is 39
years, and straight-line depreciation.
 

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