Personal/Rental property

[michaelmars]

lived in co-op for 10 years, then rented for 5-6, then left vacant until market turned 3 years..

i assume the depreciation during rental needs to be recaptured, There was no depreciation while vacant. Can any of the carrying cost during the vacant years be added to basis. Since it was vacant [investment?] property for the last 3 years could any co-op charges, insurance, etc be added to basis?

[jainen]

>>i assume the depreciation during rental needs to be recaptured<<

Don't assume--look it up. Residential MACRS is not subject to recapture, except for any Section 1245 furnishings sold at a gain.

[michaelmars]

Doesn't it reduce the basis? cost 100,000 depr 30,000 basis 70,000? didn't mean 1250 recapture

[jainen]

>>didn't mean 1250 recapture<<

You didn't SAY 1250 recapture either, whatever it means.

Yes, depreciation reduces basis. "Unrecaptured 1250 gain" is the amount of long term capital gain attributed to straight line depreciation, taxed at 25% maximum. Additional LTCG is taxed at 15% maximum.

Investment expenses should have been taken annually (assuming the former home was being held for investment). There is a provision to capitalize "carrying charges" on property being developed. I don't understand it except that they include interest and taxes. It's an annual election made on or within six months of a timely return.

[Pacun]

I hope Jainen can reply to my post on another similar post.

[jainen]

>>I hope Jainen can reply<<

Thanks for the invitation. Since you are talking about "depreciation recapture" for a rental house, I can't make any sense out of your post.

[Pacun]

OK.

I will see if others comment on the other post.