Rafael bought an apartment building on March 27,2010,at a cost of $2,000,000 (exclusive of the cost allocated to the land).He sells the building on November 3,2016.What is Rafael's cost recovery deduction on the building for 2016 if he wants to take the maximum deduction allowable on the building?

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The building is a residential rental property with a 27.5-year recovery period. The cost recovery deduction for 2016 is calculated using the mid-month convention for the 10 months Rafael owned the building in 2016. The annual depreciation is $72,727.27 ($2,000,000 / 27.5). For 10 months, the deduction is approximately $63,630.

Rafael Bought an Apartment Building on March 27,2010,at a Cost