Video instructions and help with filling out and completing Fill Form 2220 Depreciated

Instructions and Help about Fill Form 2220 Depreciated

Music in this episode we will be discussing depreciating rental property for landlords the IRS allows landlords to deduct the original cost of rental property from their taxable income by depreciating it over twenty seven and a half years however the land must be excluded only the dwelling or structure can be depreciated since the land never gets used up or worn out you cannot deduct the portion of the purchase price attributed to the value of the land you can depreciate almost any type of structure including homes multifamily buildings storage sheds detached garages swimming pools and even landscaping calculating the cost of the deduction is easy watch the following instructions to see how first you need to determine the property basis take the purchase price of the property and subtract the value of the land see the following example one hundred and fifty thousand dollar purchase price with the value of twenty thousand dollars for the land would yield one hundred and thirty thousand dollars for the property basis next you need to calculate the deduction divide the property basis amount by twenty seven point five to determine how much you can deduct each year you own the property for up to a maximum of twenty seven and a half years so a hundred and thirty thousand dollar property basis divided by twenty seven point five would yield a four thousand seven hundred and twenty seven dollar deduction when it's time to prepare your tax return the IRS Form four five six two is used to report the depreciation and amortization the final figure is reported on Schedule E of your tax return where you deduct it from your gross rental income it's important to note to be sure to maintain accurate records for each rental property including a worksheet showing your calculations most tax preparation software should provide proper documentation Music you

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