Question

Tyler purchased a rental house in may 2011 for $135,000, of which $35,000 was attributed to the land. tyler sold the rental house in august 2016. how much will he deduct for depreciation in 2016?

Answer 1

$2,424

Step-by-step explanation:

Depreciation for a rental property is calculated following a straight line depreciation method for 27.5 years.

First we must calculate the rental's house basis excluding land value:

$135,000 - $35,000 = $100,000

Then we divide $100,000 by 27.5 years = $3,636 per year

Now we divide by 12 months = $303 per month and multiply times 8 months = $303 x 8 = $2,424