John purchases residential rental property on June 30,2017 for a cost of $290,000.Of this amount,$140,000 is allocable to the cost of the home and the remaining $150,000 is allocable to the cost of the land.What is John's maximum depreciation deduction for 2017?

Question

Quizplus · Accepted Answer

The maximum depreciation deduction for residential rental property is $2,500 per year. Since John purchased the property on June 30, 2017, he is only eligible to claim depreciation for half of the year, which is $1,250. However, the cost of the land is not depreciable, so John's maximum depreciation deduction for 2017 is $1,250 x 140,000/290,000 = $625.

John Purchases Residential Rental Property on June 30,2017 for a Cost