Rental Property

[edwardb302]

Before 2021, I had split ownership of a rental property. I refinanced at the beginning of 2021 and the other person was removed from ownership. I now own 100% of the property. For depreciation purposes, how do I treat the cost basis of the property now? Do I just double the basis?

[PattiF]

This is an edited answer.

The 50% of the property that was acquired in 2021 will need to be depreciated under your ownership. 2021 will be the first year of depreciation. Residential rental property is depreciated for 27.5% years. The original portion of the property will continue to be depreciated as it had been before you acquired the other 50%.

[Edited 02/12/22 | 11:42 AM PST]

@edwardb302

[edwardb302]

ok thanks

[edwardb302]

Hi,

Is the new basis the original or depreciated cost?

[ZoltanB45]

The basis for the half of the property you took over, would be the amount you actually gave to get that half.  It doesn't sound like you paid the prior owner, so the basis would be the amount you refinanced. If you had been financing one million dollars and then you had to refinance for a total of 1.8 million (both halves), the basis for depreciation on the new property would be $800,000.