Wellington Apartments purchases an apartment building on November 9,2017,for $1,000,000 (exclusive of the cost allocated to the land).What is the 2017 MACRS depreciation deduction?

Question

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Assuming the apartment building is a residential rental property, it falls under the MACRS 27.5-year depreciation schedule. The cost of the building should be allocated between the land and the building itself, with the land being a non-depreciable asset. Without information about the allocation of costs, we will assume that 80% of the cost is allocated to the building, or $800,000. Using the 27.5-year MACRS depreciation schedule and half-year convention (which assumes the property is placed in service on the mid-point of the year), the depreciation deduction for 2017 would be $4,550.

Wellington Apartments Purchases an Apartment Building on November 9,2017,for $1,000,000