Help with depreciation for condo investment


A

Arco

I'm trying to figure out what percent of this condo I can
depreciate. I was taught that you can only dep about 80% of
real property. However, I have no land on this real
property, just a condo. Can I depreciate 100% of it?

Also, how many years do I use? 29.5, or 27.5? I'm unsure.

Any help is greatly appreciated!!!
 
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P

Paul Thomas, CPA

Arco said:
I'm trying to figure out what percent of this condo I can
depreciate. I was taught that you can only dep about 80% of
real property. However, I have no land on this real
property, just a condo. Can I depreciate 100% of it?
Unless it's a floating condo.........there is some
underlying land that you are part owner of. Even for condos
on the 17th floor.

Ask someone what percentage of the land is owned by you (in
theory you own 1/the number of units on that property).
Also, how many years do I use? 29.5, or 27.5? I'm unsure.
Assuming it's not an office condo.....27.5 years on a
straight line begining with the month placed in service.
 
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M

Missy

Arco said:
I'm trying to figure out what percent of this condo I can
depreciate. I was taught that you can only dep about 80% of
real property. However, I have no land on this real
property, just a condo. Can I depreciate 100% of it?

Also, how many years do I use? 29.5, or 27.5? I'm unsure.
You do not depreciate the land. You would need to contact a
real estate agent in your area to decide if 20% of the price
is the price of the land. It is the %age here. The 27.5 is
correct.

Missy Doyle
 
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H

Harlan Lunsford

Arco said:
I'm trying to figure out what percent of this condo I can
depreciate. I was taught that you can only dep about 80% of
real property. However, I have no land on this real
property, just a condo. Can I depreciate 100% of it?

Also, how many years do I use? 29.5, or 27.5? I'm unsure.
Depreciation applies only if you a renting the property, and
not merely because it is investment property. Perhaps
thought that is why you meant.

The 80% factor is what somebody might have told you is the
average cost of property excluding the underlying land,
which cannot be depreciated. Find out the land value and
then subtract it, and then, if rental property, depreciate
it ovoer 27.5 years.

ChEAr$$$$,
Harlan Lunsford, EA n LA
 
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S

Stuart A. Bronstein

Unless it's a floating condo.........there is some
underlying land that you are part owner of. Even for condos
on the 17th floor.
I'd always heard that condos could be 100% depreciated
because there was no direct ownership of the land, or the
land was such a minor part. But I couldn't find a case or
regulation to support that, so I suppose I was just wrong.

Stu
 
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H

Harlan Lunsford

Missy said:
Arco wrote:
You do not depreciate the land. You would need to contact a
real estate agent in your area to decide if 20% of the price
is the price of the land. It is the %age here. The 27.5 is
correct.
While some real estates might be knowledgeble about area
conditions and relative land/building values, I would
hesitate to recommend this. Rather the local county
courthouse, or whichever taxing authority pertains, will
have the tax assessment as to all three factors.

ChEAr$$$$$,
Harlan Lunsford, EA n LA
 
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M

MDinDestin

One quick good faith way to determine the land value is to
check the tax assessment. Call the tax assessor and ask how
close the typical assessed value is to the actual market
value.

I suspect the value of the land is in the single digits
relative to the overall market value of the unit; but, of
course, that depends on the location.
 
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B

Bob

Harlan Lunsford said:
Arco wrote:
Depreciation applies only if you a renting the property, and
not merely because it is investment property. Perhaps
thought that is why you meant.

The 80% factor is what somebody might have told you is the
average cost of property excluding the underlying land,
which cannot be depreciated. Find out the land value and
then subtract it, and then, if rental property, depreciate
it ovoer 27.5 years.
Here in Hawaii (and maybe other places as well) many condos
are built on leasehold land. I would think in that
situation, the entire cost of the condo could be depreciated
(assuming of course it is rental, rather than personal use).
And the monthly lease payment would be deductable as well.
 
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