Jose purchased and placed in service a rental house in Janua

Jose purchased and placed in service a rental house in January 2009 for $110,000, which included $10,000 for the land. In August of the eighth year of renting the property he decided to sell the rental house to the tenant. How much depreciation may he deduct in the eighth year?

Solution

As per IRS, the rental house falls in the 27.5 years useful life category. Basis of the property is $110000-10000 = $100,000

Depreciation in year 8 assuming . Residential Rental Property-GDS (27.5-year S/L with mid-month convention)

3.636%* 100,000 = $3636