I have a co-op apt rental property. Under IRS Pub 4562 depreciation calc for co-ops takes the underlying mortgage into account. Do I need a special version of Turbo Tax?

Forum|Forum|3 years ago
February 3, 2023
2 replies
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When I entered the data for my rental property, it did not ask me if it was a co-op and there were no questions about the underlying mortgage in order to figure the depreciation deduction.

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Cynthiad66

As with any rental property you are only allowed to depreciate the cost of the building. Below is an example to determine the depreciable basis for co-op rental property.

Example for figuring your depreciable basis.

So if you purchased the coop for $200,000, and the land was valued at $10,000 and the building was valued at $100,000, the purchase price of your land is $200,000 x 10%, or $20,000. And the building price would be $180,000, which is the depreciable basis.

Depreciation commences as soon as the property is placed in service or available to use as a rental. By convention, most U.S. residential rental property is depreciated at a rate of 3.636% each year for 27.5 years. Only the value of buildings can be depreciated; you cannot depreciate land.

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wepa326453Author

Thank you for your reply but the response did not account for the underlying mortgage on the co-op building. Do I have to add in the amount of the mortgage to calculate the depreciation deduction?

Vanessa A

Your mortgage itself is not accounted for when taking depreciation. Yes, you would depreciate the amount you paid, but sometimes a mortgage has other expenses such as consolidating other bills if you did a refinance. So you do not use your mortgage to determine your depreciation deduction. You use your purchase price.

Other than the interest you pay on the mortgage, your actual mortgage is not relevant to your taxes and deductions. You would deduct the mortgage interest in the same way you would on any other rental property in the interest section.

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AmeliesUncle

I'm unsure if TurboTax is set up for that. I suspect it may not be able to do it.

https://www.irs.gov/publications/p946#en_US_2020_publink[phone number removed]