Tally owns a house that she has been living in for eight years. She purchased the house
Question:
Tally owns a house that she has been living in for eight years. She purchased the house for $245,000 and the FMV today is $200,000. She is moving into her friend’s house and has decided to convert her residence to rental property. Assume 20% of the property’s value is allocated to land.
a. What is the basis of the house for depreciation?
b. If she claims depreciation of $15,000 and sells the property six years later for $260,000 (20% allocated to land), determine the gain on the sale of the building and gain on the sale of the land.
c. How much of the gain is due to depreciation?
d. If the FMV is $290,000 when she converts the house to rental property instead of $200,000, what is the basis of the house for depreciation?
Step by Step Answer:
a 160000 200000 40000 allocated to land b 27000 and 3000 ...View the full answer
Federal Taxation 2018 Comprehensive
ISBN: 9780134532387
31st Edition
Authors: Thomas R. Pope, Timothy J. Rupert, Kenneth E. Anderson
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