Question

If you sold your rental house (which was only for business use) in April, how would you calculate depreciation for that year? Please give an example: if you sold the house in April 2017, but the building was placed into service in February 2011, and the building cost 200,000 what would the depreciation be in April 2017 when the rental home was sold?

Answer 1

As per the IRS rules, Property is depreciated using the Modified Accelerated Cost Recovery System (MACRS). Here, Residential rental property can be depreciated for 27.5 years and the Commercial rental property can be depreciated over 39 years.
In the given case, the house is used for commercial purpose i.e., for business, thus we need to take 39 years as useful life.

Depreciation table:

Mo/Yr	1 year	2-39 year	40 year
Jan	2.461	2.564	0.107
Feb	2.247	2.564	0.321
Mar	2.033	2.564	0.535
Apr	1.819	2.564	0.749
May	1.605	2.564	0.963
Jun	1.391	2.564	1.177
Jul	1.177	2.564	1.391
Aug	0.963	2.564	1.605
Sep	0.749	2.564	1.819
Oct	0.535	2.564	2.033
Nov	0.321	2.564	2.247
Dec	0.107	2.564	2.461

Given that the building was placed into service in February 2011,
That means depreciation for 2011 will be = 200,000*2.247% = 4,494
And for 2012 to 2016 the depreciation will be same = 200,000*2.564% = 5,128
and for 2017, we sold in April that means we used only for 4 months = 5,128*4/12 = 1,709.33