Residential rental property depreciation and property sale

[jbrwing]

What is the name of your state? Virginia

In 2004 we sold a single family residential rental property using a 1031 exchange program. Many improvements (roof, appliances, new kitchen, new windows, etc) were added over the years and some to facilitate the house sale. The question is: If the improvement (windows, new kitchen, etc) was not fully depreciated at the time of sale can the remaining depreciation be deducted on 2004 Federal income taxes? I'm sure this info is in an IRS publication, but I've not been able to locate it.

Thanks for your thoughts and information, Bill

 

[Snipes5]

If it was not fully depreciated, and you rolled it into a 1031 exchange, it would have been included in the basis at the time of the exchange. Since it was an exchange, that basis remains, and you add to it whatever the cost of the new property was, above the basis of the old. That is how you obtain the basis of the present property.

That new basis is what you use to begin depreciating the new property, so the answer to your question is no.

Snipes

 

[jbrwing]

Snipes

Thanks for the information. Turbo Tax did not include additional unused depreciation, but I thought I'd heard somewhere that upon the sale the owner could take (i.e. deduct) the remaining unused depreciation. I like my answer better than yours (because it saves me $$$). I looked in the IRS pubs but couldn't find the info.

Bill

 

[Snipes5]

All fine, except a 1031 is an exchange, and is not technically the same as a sale of rental property.

Snipes