This is asked because some property that was depreciated is required to use a longer recovery period when calculating alternative minimum tax (AMT). The AMT on your home can be calculated by taking your cost basis (do not include land) and divided by the recovery period you originally chose for this home when used for rental or other business.
Don’t refigure depreciation for the AMT for the following.
- Residential rental property placed in service after 1998.
- Nonresidential real property with a class life of 27.5 years or more placed in service after 1998 that is depreciated for the regular tax using the straight line method.
If your home was placed in service before 1998, the difference between regular depreciation and AMT will be calculated by taking the cost basis of the home (not land) and dividing it by 40 years. Using the mid-month conversion you would calculate half of the month the home was placed in service and half a month for the month removed from service or sold.
Subtract this total from the amount of depreciation that was actually used and the difference will be the AMT adjustment for Form 6251. See Form 6251 Instructions for more information.
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