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Old 03-19-2013, 12:59 PM
13 posts, read 14,274 times
Reputation: 10


Ah, tax season...

I am seeking some arm-chair advise for our first depreciation. Short-story is that our accountant is kinda lame, and we don't want to use him anymore. So I'm going to do our taxes for ourselves.

Read on for my question:

We have a small condo we bought this last year (2012) as a rental - in a large, high-rise building. I am seeking some information on how to properly depreciate the condo - it being tax time. If it makes any difference, we are holding it as a multiple-member LLC. This is in California.

My question - obviously I can not depreciate the entire purchase price, but what amount do I depreciate?

For example: Can I depreciate any of the greater building (i.e. the 'stuff' in the building, elevators, etc)? I am assuming not, but I'm not sure (I was thinking that the HOA does the depreciation separate, thus has nothing to do with my individual unit, but I'm not sure...)

What I have in 'inkling' to do is to consult my property tax bill, deduct the land price from the price we PAID, and then depreciate this number. That breaks down (roughly) to about 75% improvements to 25% land. On the other hand, it would be more advantageous to use the 'typical' 80/20 split, but having my property tax bill in-hand makes me wonder if I should use that.

Lastly the property tax bill lists 'improvements' as a slightly different number than if I were to base the building value on what we paid. In other words, the property tax bill lists a slightly different (more) amount total (the improvements + land) than what we paid. This sum difference is only about 1000 bucks. But to be correct, which total would we use then, for our depreciation math? I would assume it would be, instead, total of what we paid (including closing costs) minus listed land value on the tax bill. As opposed to "improvements on the property tax bill minus land-value on the property tax bill".

More than anything I just really want it to be correct and not trigger an audit lol...

The other question is that we put in new window-coverings which are pretty high-end. I was going to depreciate these at 5 years, but the question is then, do I do that as straight-line or otherwise? I sort of assume it might make sense to depreciate more the first year or two, when they are 'new', as opposed to straight-line. I do see calculators online for that type of deprecation, just not sure what is allowed, standard, etc...
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Old 03-19-2013, 08:36 PM
4,567 posts, read 10,652,230 times
Reputation: 6730
The IRS has any tax info you will ever need, free.

For condo depreciation see publication 946:
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Old 03-21-2013, 08:50 PM
Location: Baltimore
1,758 posts, read 5,136,785 times
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TurboTax¬ģ Tax Preparation Software, FREE Tax Filing, Efile Taxes, Income Tax Returns
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