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Calculating part-year depreciation on rental property.

On June 30 2010 I converted a rental property to use as a personal residence. 2010 was the tenth year of depreciation in a 27.5 yr. straight line recovery method. Using the mid-month of June as my I conversion date I calculate the depreciation using the following formula:

5.5 times the yearly rate in year ten of 3.636% divided by 12 to come up with a part year rate of 1.667% for 2010. Is this correct?

Also, am I correct in assuming that if I live in the residence for over two years and sale the property without renting it again, I will need to pay taxes on any gains based on the fraction of the 5.5 months it was rented in 2010 as compared to total time the property was owned?

Reply to
David Fouste
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The depreciaion calculation seems right but why are you doing this by hand?

The total amount of depreciation while a rental, but not more than the gain realized on sale, will be recaptured (added to gain) but you still get to invoke Sec 121 to exclude gain under the 2 of 5 rule.

However the exclusion amount is reduced by the percentage of time beginning 1/1/09 to date of sale that the property was a nonqualified residence. It was a nonqualified residence from

1/1/09 through June 30 2010.
Reply to
Arthur Kamlet

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