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In anticipation of the upcoming Exempt Org and Texas Franchise deadlines (5/15), we've compiled a list of the most common questions here.
In anticipation of the upcoming Exempt Org and Texas Franchise deadlines (5/15), we've compiled a list of the most common questions here.
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- How can I calculate the depreciation for a property that is residential and commercial?
How can I calculate the depreciation for a property that is residential and commercial?
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LaraMultiservic
Level 3
06-16-2023
01:32 PM
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How can I calculate the depreciation for a property that is residential and commercial? I am preparing a partnership tax return and want to know the correct way to depreciate a property that is half residential and half commercial. Please advise.
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BobKamman
Level 15
06-16-2023
01:58 PM
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@TaxGuyBill answered a question like this back in 2019 on a TurboTax forum. I'm too lazy to look up the source or figure out how to post a link, but what he said:
"The determining factor is that if 80% of the total building rents are for Residential Dwelling Units, then the entire building and improvements are deprecated over 27.5 years. If it does not meet the 80% test, the entire building and improvements are depreciated over 39 years."
TaxGuyBill
Level 15
06-16-2023
05:25 PM
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As Bob pointed out, the definition of "residential" or "nonresidential" real estate is defined at §168(e)(2), and it is based on the "building or structure". So the entire building is same, and if less than 80% of the rents are for "dwelling units", then the entire building is nonresidential.
