some tax question about depreciation on your property for renting it out.. (personal property, condo)

[vincentnyc]

let's say u recently purchased a $300k condo (just the apt...not land)in nyc and want to rent it out. i heard u can depreciate it on your 1040. u tax the "fair market value"/27.5. i heard there are several way to determine fair market value like appraisal, add 10% to the tax assessment, etc. my question what happen if the condo has a 10 yrs tax abatement where the monthly tax is very low...like $30/month. but here is my questions:

1. What is the easiest and cheapest way to determine
"fair market value?" Isn't the higher the fair market value, the more you would be able to depreciate? So isn't it an advantage for the owner to try get a higher fair market value? But if won't u get audited if u inflate the fair market value too much?

2. also for the 1st year, do u use that $300k/27.5 for the 1st year for depreciation? what about 2nd year? u determine the fair market value and divide it by 27.5 or 26.5? 3rd year and so on? thx in advance.

ps this is a condo in nyc btw if it helps.

[austin-steve]

Depreciation is based on your purchase price, less any non-depreciable value, such as land value. Appraised value is irrelevant.

Steve

[vincentnyc]

if it is based on purchase price...do u still use $300k/27.5 for the 2nd year? if not, please give me an example? would it be $300k/26.5?

[DanielChang]

It's only the residential property building (not the land, the personal property or the property improvements) / 27.5 and depreciate that amount for the next 27.5 years or until you sell the property.

You will likely realize capital gains when you go to sell the property though (since the amount depreciated affects your basis).