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I bought an apartment in Boston in 2012. I lived in it from 2012-2015, then rented it short term from 2015-2018, then lived in it again from 2018-2021, and then rented it from 2021-2023 until I sold it in Feb 2023. How should I claim depreciation?
AI accountant’s answer:
Based on the information you've provided, you can claim depreciation on the rental periods of your apartment in Boston. You first rented the property short term from 2015 to 2018, and then rented it again from 2021 to its sale in February 2023. To calculate the depreciation, you need to consider the periods when the property was used as a rental. You can use the Modified Accelerated Cost Recovery System (MACRS) to determine the depreciation. Residential rental property is typically depreciated over 27.5 years using the straight-line method. Here's a step-by-step process: 1. Determine the cost basis for the apartment, which typically includes the purchase price and any associated costs (excluding the value of the land). 2. Allocate the cost basis between the building and land. You can use the property tax assessment or an appraisal to determine the land-to-building value ratio. Depreciation can only be claimed on the building portion. 3. Divide the building portion of the cost basis by 27.5 years to calculate the annual depreciation amount. 4. Multiply the annual depreciation amount by the total number of years the property was rented (excluding the time it was your primary residence). 5. You also need to calculate the depreciation for the period between January 1, 2023, and the date of sale in February 2023, which is a partial year. Usually, the IRS allows using a mid-month convention, meaning you can claim half of the monthly depreciation for the month you sold the property. You'll need to report the depreciation on Schedule E of your tax return for each year the property was rented. Also, when you sell the property, you'll need to report the depreciation for recapture. The accumulated depreciation allowed or allowable will generally be subject to a 25% tax rate as unrecaptured Section 1250 gain. Please note that this information is a general guideline, as your specific tax situation may be different. It is best to consult a tax professional to ensure accuracy in calculating and claiming depreciation.
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Isaiah McCoy, CPA
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Ask an AI Accountant

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What’s a Rich Text element?

The rich text element allows you to create and format headings, paragraphs, blockquotes, images, and video all in one place instead of having to add and format them individually. Just double-click and easily create content.

Static and dynamic content editing

A rich text element can be used with static or dynamic content. For static content, just drop it into any page and begin editing. For dynamic content, add a rich text field to any collection and then connect a rich text element to that field in the settings panel. Voila!

How to customize formatting for each rich text

Headings, paragraphs, blockquotes, figures, images, and figure captions can all be styled after a class is added to the rich text element using the "When inside of" nested selector system.

Comment from reviewer
This is some text inside of a div block.

What’s a Rich Text element?

The rich text element allows you to create and format headings, paragraphs, blockquotes, images, and video all in one place instead of having to add and format them individually. Just double-click and easily create content.

Static and dynamic content editing

A rich text element can be used with static or dynamic content. For static content, just drop it into any page and begin editing. For dynamic content, add a rich text field to any collection and then connect a rich text element to that field in the settings panel. Voila!

How to customize formatting for each rich text

Headings, paragraphs, blockquotes, figures, images, and figure captions can all be styled after a class is added to the rich text element using the "When inside of" nested selector system.

Not Correct.
Icon check
Looks good

Keeper’s AI Accountant

This AI accountant is powered by GPT-4, but has up-to-date knowledge of tax law. It’s been trained on federal and state tax updates for 2023. With credentialed tax professionals fact-checking its responses, it applies IRS rules to real-world situations.

Find write-offs.
File taxes.

Keeper helps independent contractors and freelancers discover tax deductions and file taxes.

Get started