I bought a home in Mar 2004 and rented it out 1/1/2006 for 5 months and ending up evicting the tenant and sold it 9/15/06. I'm getting ready for taxes and wanted to know, do I have to depreciate my home? I took a good loss on the home so there is no capital gains whatsoever.
2007-01-18 08:22:21 · 2 answers · asked by I think its rude 2 in Business & Finance ➔ Taxes ➔ United States
Yes, you can take depreciation.....and you should take depreciation. If you do not claim depreciation, when you were eligible to do so, the IRS will reduce your basis in the property by the depreciation you were allowed to take, even if you did not take it. Since you are first depreciating and also selling the house in the same year, all you are really doing is shifting some of the loss from Schedule D (capital loss) to Schedule E (rental loss) so it is really a wash. In total, you are not going to notice a difference.
2007-01-18 08:28:46 · answer #1 · answered by jseah114 6 · 1⤊ 0⤋
jseah is right. I would just add one thing. Capital losses can only be relieved to the extent of $3,000 per year. If this is your only rental activity, you get to take the full amount of the loss against your other income.
2007-01-18 17:52:47 · answer #2 · answered by skip 6 · 0⤊ 0⤋