Hi, I have a small retail building with the outside shell built in December 2006. The inside was completed in July of 2011 and rented in August of 2011. When can the depreciation start? and can all the tenant improvements for the inside paid by the landlord take an accelerated depreciation schedule like 15 years or ? Thanks a lot!
Depreciation starts when the retail building was available for rent, which will likely be shortly before when it really started renting. Available for rent means it's ready for businesses to move in, and you're probably advertising that is available (even though the ads may be free like on craigslist).
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You begin to claim depreciation when your property is placed in service for either use in a trade or business or the production of income. The placed in service date for your property is the date the property is ready and available for a specific use. It is therefore not necessarily the date it is first used. If you converted property held for personal use to use in a trade or business or for the production of income, treat the property as being placed in service on the conversion date. See Placed in Service under When Does Depreciation Begin and End in chapter 1 for examples illustrating when property is placed in service.
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But if you have a business that buys property, renovates them, then rents them out, it seems depreciation ought to start when you purchase the item, and depreciation on each capital improvement starts when you did the work. I'm sure that's what big commercial companies do.
I have no idea what inside and outside shell are, but property that is part of the main property, that is attached to it, is depreciated the same as the property itself. Looks like commercial property is 39 years, and straight-line depreciation.
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