If my assumptions are wrong, please correct me, as wrong assumptions means the information I provide you may also be wrong.
Originally there was a business on the property.
So am I correct in assuming you did not own the business? Instead, some other business owner rented the property from you for their business?
The business closed and the owners started a solar farm.
Wait I minute. The "owners"??? owners of what? The property? I thought you owned the property. If you do own the property, are you now renting out the land to another business owner that owns some kind of solar energy production business?
The buildings are actually falling and can never be rented again.
Does the county property appraiser still have those buildings included on the property tax rolls? If so, I would highly suggest you get them razed and removed. Then request an updated tax appraisal on the property. That will lower your property taxes quite significantly. Additionally, the cost of razing and removing the buildings can be declared a land improvement, thus adding to your cost basis in the land. On top of that, once the buildings are actually removed, any remaining depreciation not yet taken on the buildings gets added to the cost basis of the land. That too will decrease that taxable gain on that land, when/should you sell it in the future.
I thought you have to actually sell the property before you can do this ?
You are correct. But not just sell. You have to sell or "otherwise dispose of" the asset to take it off the books. If you have the buildings razed and removed, that's a disposal. The cost of that gets added to the cost of the land, and the cost of the not yet taken depreciation also gets added to the land. That means when you do sell the land in the future, you will not pay any taxes on the total land cost basis. That's when you get to actually "realize" the losses on your disposed asset.
One thing I should point out about the disposal costs of the buildings. Above I said add those costs to the cost basis of the land. You can do that. But depending on your specific circumstances you "may" also be able to declare it a rental expense. Though I would not suggest that, it may be an option depending on your situation.
