As with any rental property you are only allowed to depreciate the cost of the building. Below is an example to determine the depreciable basis for co-op rental property.
Example for figuring your depreciable basis.
So if you purchased the coop for $200,000, and the land was valued at $10,000 and the building was valued at $100,000, the purchase price of your land is $200,000 x 10%, or $20,000. And the building price would be $180,000, which is the depreciable basis.
Depreciation commences as soon as the property is placed in service or available to use as a rental. By convention, most U.S. residential rental property is depreciated at a rate of 3.636% each year for 27.5 years. Only the value of buildings can be depreciated; you cannot depreciate land.
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