Home office now turned rental - Handling depreciation

Feb 25, 2013 4 Replies

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Faraz H 13 years ago

I had a home office for several years and claimed the deduction on my schedule C. The software I used automatically calculated the depreciation and multiplied by the ratio of my office sq. footage to total sq. footage.

I am now renting out this same property so no longer claiming the home office deduction. So for date put in service, I assume I use the date I first used it as a home office and not the date I first started renting the property out?

Will the depreciation I took from the home office then add to whatever depreciation I take from the rental?

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paulthomascpa 13 years ago

"Faraz H" wrote

Your Schedule E depreciation start date is the date you placed the property into rental service. Use that date and the adjusted basis for the property.

If it's a split year, part home-office depreciation and part rental, then show the appropriate months depreciation on the 8829 for the home office use and the appropriate rental depreciation on schedule E. Doing so may involve setting up a separate 4562 for the rental house, separate from the 4562 home office in the software.

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Faraz H 13 years ago

Will the adjusted basis be the previous basis minus the depreciation recapture for the home office? I was using 61k for the basis and deducted around 1500 for home office depreciation over several years. Would it be now 58.5k for adjusted basis?

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X 13 years ago

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remove ps 13 years ago

I think adjusted basis will be the smaller of cost - depreciation, or FMV when placed into rental service - depreciation.

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