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March 6, 2023
Question

How does inflation on rental affect depreciable basis

  • March 6, 2023
  • 2 replies
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My rental property increased in the assessed value, substantially, and I was wondering if I can use the new basis to determine a depreciation schedule

2 replies

March 6, 2023

No. basis is what you paid when you bought it and what you paid for capital improvements afterwards. inflation does change the amount you paid historically. 

March 6, 2023

The IRS Publication 527, Residential Rental Property does not mention changing the cost basis of a rental to reflect a changing property value. The initial basis is what is used for the life of the property without any modifications. Improvements will increase the basis.

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