I have some specific tax questions related to filling out Schedule E and Form 4562 (depreciation) for a rental property:
How do I calculate the basis for a home purchased in 2005 that I moved out of and put up for rent in 2012? Would the basis when the home first went on rent in 2012 have been the same price that I paid for the property in 2005 (minus the cost of the land, as that is not supposed to be factored into basis)? Or would the basis have been decreased from 2005 to 2012 for depreciation during that time period? If so, how do I calculate that? Using the same MACRS depreciation percentage table?
Similarly, for a residential rental property, the recovery period is 27.5 years--is this from the time the home was built, or is this from the time the home was placed "in service" (ie started to rent out)? For example, am I in recovery period year 11 (if counting first year as 2005 when home was built) or am I in recovery period year 4 (counting first year as 2012 when it was first rented)?
Finally, if I'm 33% owner of the rental, how does that effect the MACRS deduction--do I just divide the number I get by 3 (eg, multiple by 33%) to get my portion?
This is the first year I'm doing my own taxes and do not understand how in years past the folks that prepared the taxes did things, thus my confusion and trying to start from the beginning.
Would appreciate any input, cheers!
How do I calculate the basis for a home purchased in 2005 that I moved out of and put up for rent in 2012? Would the basis when the home first went on rent in 2012 have been the same price that I paid for the property in 2005 (minus the cost of the land, as that is not supposed to be factored into basis)? Or would the basis have been decreased from 2005 to 2012 for depreciation during that time period? If so, how do I calculate that? Using the same MACRS depreciation percentage table?
Similarly, for a residential rental property, the recovery period is 27.5 years--is this from the time the home was built, or is this from the time the home was placed "in service" (ie started to rent out)? For example, am I in recovery period year 11 (if counting first year as 2005 when home was built) or am I in recovery period year 4 (counting first year as 2012 when it was first rented)?
Finally, if I'm 33% owner of the rental, how does that effect the MACRS deduction--do I just divide the number I get by 3 (eg, multiple by 33%) to get my portion?
This is the first year I'm doing my own taxes and do not understand how in years past the folks that prepared the taxes did things, thus my confusion and trying to start from the beginning.
Would appreciate any input, cheers!
Comment