If you "sell" each of the non land/building assets(such as fence, roof) for a gain as was the entire property sale (more than cost) I don't see how you benefit ie. recovering the cost that you paid for the fence roof etc
Ex= 27.5 k for new roof depreciated over 27.5 yrs, got 5 yrs into so 5k was depreciated and then sell the rental property - is the remaining 22.5 k is then added to the "cost basis of the building" or a "selling expense" or what so that I benefit from the cost of installing a new roof.
Depreciation MUST be taken and recaptured as ordinary income when you sell which reduces the capital gains on the return.
Simple example :
Purchase price + cost to purchase = cost basis
cost basis - depreciation taken = adjusted cost basis
sale price - adjusted cost basis + cost of sale = profit or loss
Profit - depreciation recaptured as ordinary income (form 4797) = capital gain or loss (Sch D)
So for the remaining 22.5k roof asset i will
1>sell roof for 22.5k for a 0 gain
2>no expense of selling, keep selling expenses all on building
3>add 22.5k to cost basis
4> assume Form 4797 gets the recaptured depreciation of 5k
Is this an acceptable approach, or are there errors?