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Deductions & credits
I wish I had the capability or maybe the knowledge to decrease the depreciation in my previous years filings so that I pay less taxes after the sale of this property.
I know what you mean and where you're coming from on that. It's the reason I keep my depreciation as low as a legally can. The law basically reads that you must recapture the *higher* of depreciation taken, or depreciation you should have taken. So if one claims less depreciation than they were required to, or no depreciation at all, you still have to recapture the depreciation you "should" have taken.
. I was asked whether it was a business or investment. I have a regular job so this must be an investment I presume. Please confirm.
It's an investment which gets reported on SCH E. For residential rental property to be classified as a business and reported on SCH C has a number of requirements which most landlords don't meet. Even a fair number of AirB&B and VRBO property owners don't/can't meet the requirements to be classified as a business.
One major difference with treating rental property as a business that gets reported on SCH C is the depreciation time frame. Residential real estate that qualifies as a business is depreciated over 39 years on SCH C, while *normal* (for lack of a better word) residential rental real estate is depreciated over 27.5 years on SCH E.
When you have property thats been reported on SCH E for a few years, become qualified as a SCH C business, doing the switch from E to C (or vice versa) is an absolute nightmare dealing with the different depreciation schedules between SCH E and SCH C.