Beach House Depreciation and Eventual Recapture

Forum|Forum|1 year ago
May 17, 2024
2 replies
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We are looking at buying a house at the beach. We will plan on using it much more than 10%. Lets say we will use it 126 days and it will be rented at FMV 84 days. (60/40) .

Let's also say that house cost $375K and the the non-land basis is $275,000 .
And finally, we'll say that the incoming rental income will be 25K - just rental mgmt expenses = 20K.

The first Q is, do we get to depreciate the house, an if so, by what amount .
Lets say we sell the home 10 years later at a price of $500K, on what amount would we pay taxes.

There will be a follow on Q, but I want to get this straight first .

Not A Product Question

Anonymous_

Employee

A threshold question and a comment:

You only have management expenses and no other expenses? There should be real estate taxes, maintenance, repairs, utilities, etc.

No one knows what you will pay if you sell in 2 years, much less 10 years as the law can change, perhaps dramatically. At this time, you would have to consider depreciation recapture and capital gains tax.

_Mix_Author

noted - the expenses were dumbed down as the Q is really based around depreciation only -
I'm trying to get at whether the
a) vacation (as opposed to investment) property can even be depreciated
b) and if so, does it get apportioned as per personal/rented days