KrisD15
Expert Alumni

Business & farm

You would need to enter the property on your Schedule E with the adjusted basis and depreciate 27.5 years. 

The adjusted basis would be the original cost/basis less depreciation taken (or could have been taken) while it was a Business asset (on schedule C) 

 

When you eventually sell, the depreciation recapture will be Ordinary Income and proceeds above your original cost will be capital gains. 

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