2012 Depreciation

We do not have a copy of the depreciation table for 2012.

The building was placed in service on 8/30/2012. The accountant used a basis of $884,167 for the building and $219,000 for the land.

Rental real estate is depreciated in this way:

  • Life: 27.5 years
  • Convention: mid-month
  • Method: straight line

You depreciate rental real estate using Table A-6: Residential Rental Property, Mid-Month Convention, Straight Line—27.5 Years:

In the following Excel spreadsheet, the first tab calculates the depreciation deduction for the building using the rates from Table A-6. The second tab calculates the depreciation deduction by hand. There is a slight discrepancy because the rates in Table A-6 are only up to 3 decimal points. (I think it doesn’t matter which table you use, as long as you’re consistent from year-to-year, because in the end, you deduct the entire basis of the building.)

2013 Depreciation

We do not have a copy of the depreciation table for 2013.

We do have a copy of Form 4562:

The $3,000.00 you see in the depreciation were paid to Leyon Diamond Corstruction Corp (Nazrol): 2 checks, each one fifteen hundreds. It was to waterproof the wall at the back of the building.

  • 6/29/2013 – Leyon Diamond Constraction Corp – Check # 1353 – $1,500.00
  • 7/8/2013 – Leyon Diamond Constraction Corp – Check # 1358 – $1,500.00

Form 4562 from the 2013 tax return shows that $3,000 is now being depreciated as a 15-year property using 150 declining balance method with the half-year convention.

  • Life: It is a 15-year property because it is improvements that were made directly to land or added to it.
  • Convention: It is the half year convention because neither the mid-quarter convention nor the mid-month convention apply.
  • Method: It uses the 150% DB method because all 15-year property uses this method. (Note that this method [1] provides a greater deduction than the straight line method during the earlier recovery year, and [2] changes to the straight line method when the SL method provides an equal or greater deduction.)

Table A-1 is used for 15-year property with the half-year convention;

Using the percents from Table A-1, here is the depreciation schedule for the capital improvement:

2014 Depreciation

2016 Depreciation

2017 Depreciation

Depreciation chart:

Form 4562:

During 11/2017, Big Apple replaced the heater for the building at a cost of $19,400. The depreciation is as follows:

  • Life: 7 years because it is the general category.
  • Convention: Mid-quarter because “the mid-month convention does not apply and the total depreciable bases of MACRS property you placed in service during the last 3 months of the tax year . . . are more than 40% of the total depreciable bases of all MACRS property you placed in service during the entire year.” Pub 946. In our case, 100% of the depreciable assets were placed in the last 3 months of the year.
  • Method: Table 4-1 in Pub 946 shows that the method for a 7-year non-farm property is 200% declining balance. (Note that this method [1] provides a greater deduction than the straight line method during the earlier recovery year, and [2] changes to the straight line method when the SL method provides an equal or greater deduction.)

Appendix A of Pub 946 shows that we need to use Table A-5:

Using the rates from Table A-5, here is a calculation of the depreciation deduction:

2018 Depreciation

2019 Depreciation

2020 Depreciation

We renovated 2F and 2R:

  • Capital Improvement: $9,515
  • Appliances: $1,220

Appliances:

  • $1,220 to depreciate
  • 5-year property
  • 10/15/2020 - Stove for 2F purchased for $580
  • 11/25/2020 - Stove for 2R purchased for $640
  • Probably mid-quarter ???
  • 200% DB
  • Table A5: 5 year

Capital Improvements:

  • $9,515 to deprecate
  • Probably 7-year – ???
  • mid-quarter -
  • 2005DB probably ???
  • Table A5: 7 year