On May 9, 8:29�pm, "Colbyt" wrote:
wrote in message

ups.com...

On May 8, 9:13 pm, Pat wrote:

But with your condo, you are doing the same thing. *Over 40 years you
are depreciation it. *If bought it for $160,000, you claim about $4000
per year. *At the end of 40 years it has no book value.

I thoght you just depreciate over 27.5 years the basis, i.e the
purchase price minus the cost of the land. So for a 160k home, the
basis is around 120k.

Ill need to read up on the capital gains tax. I thought if you put the
money into another property you dont owe any taxes. Or if the sale
prices is less than 250k for an individual, then you also dont owe
capital gains tax?

You are close to right. *80% of the purchase price has long been a defacto
acceptable structure valuation to the IRS. Meaning you can depreciate 80%.

The depreciation period for residential rental property is 27.5 years.
Depending on the month *it is placed in service that might stretch out to 29
tax years with a minor deduction the first and last year.

The gottcha is that capital improvements like a new roof or furnace must be
depreciated over the same time period. *You spend all the money one year and
don't get to write it off. You can wind up with several depreciation
schedules for one property.

Tax free exchanges for a like property are an option with rules. *New
property must cost more than the old and you can not achieve any mortgage
relief in the transaction. Basis in new property is adjusted by the basis in
the old. That means you do not get to depreciate the new property at full
purchase price. *Only the remaining basis. You must never take physical
custody of a cash proceeds and you must buy the new property with 6 months
(I think it is 6). *There is a whole list of complicated timeframes that
must be met. *Professional advice is highly recommended for this.

All depreciation is subject to recapture when the investment is sold. *This
is at the ordinary income rate and NOT at the capital gains rate. So, simply
reducing the basis by the depreciation is not 100% accurate.

The 250K capital gains write off is for a house that has been your primary
residence for 2 of the 5 years immediately prior to the sale. *If you
convert a rental to a residence for 2 years prior to selling it you can
exclude the capital gain portion of the sale but all post 1997 depreciation
or earlier ACRS depreciation is still subject to recapture as ordinary
income at your tax rate.

Please do not use this post as legal advice. *I am an informed investor but
my understanding may contain flaws.

Colbyt

i had realtives who replaced 1/2 of roof each year for years so it
was a repair rather than replacement. repairs can be written off each
year.

your labor for repairs isnt deductinble, jus paid help/ although you
can deduct supplies