Valuing improvement assets after halt of rental business

Forum|Forum|3 months ago
April 2, 2026
1 reply
141 views

If a Rental (100% business use) was taken off market to sell, and rental activities (and therefor depreciation) stopped, but property did not sell for a long time, and the assets (had they had been depreciated) would have eventually zeroed out on the books during the time the property was for sale, how should that be handled when property is finally sold?

Example:

1/1/2000 - House purchased: $100,000

1/1/2009 - Asset (Back Deck) Acquired: $10,000

1/1/2023 - Rental activity (and depreciation) ceases as property is listed for sale, (Deck is still on books.)

1/1/2024 - Property still for sale, however, deck would have fallen off books, (due to 15 year life)

1/1/2025 - House finally sells: $200,000

I am thinking the recapture on deck would be left off the sale entirely as any depreciation recapture would be negated because of the age of the deck. Is that correct?

- Not owner occupied/lived in -

Thank you!

Not A Product Question

AmyC

Level 15

The allowed or allowable depreciation is complete on the deck. You are right, it is fully depreciated. Yet, it is still an asset.

The house, land and deck are all allocated a share of the sale based on the original percentage.

To get the percentages, use original cost:

Deck = $10k / $110k total of purchases = 0.0909 = 9% or 9.1%
House = $x / $110k
Land = $y / $110k

Use those percentages times the sales price to get the sales price for each item.

Deck = .09 x $200k = $18,000 sales price
House
Land

**Say "Thanks" by clicking the thumb icon in a post. **Mark the post that answers your question by clicking on "Mark as Best Answer"

RuffyKAuthor

Level 2

I see, if the asset is still in use, then recapture will happen - that makes sense.

What happens if an asset is no longer in use when the property is sold? For example, if a storage shed was removed from the rental property and moved to the owners main residence while the rental was being remodeled and put up for sale?

DianeW777

Level 15

It depends. In your example, the storage shed was not sold, but rather converted to personal use. In this scenario, you will select, This asset was sold, traded, converted... etc. There will be no sale date and you will indicate it was converted to personal use since it is no longer part of the rental property.

It will continue to be a taxable asset for the IRS until it is sold or junked, so it's important to keep all of the records about this storage shed until it is disposed of.

@RuffyK

**Say "Thanks" by clicking the thumb icon in a post. **Mark the post that answers your question by clicking on "Mark as Best Answer"