Depreciation for buy and hold

[Scott Ball]

I need a bit of clarification on depreciation since where I live overseas they calculate it completely differently. 

My understanding so far is that you can start depreciating your property once it is rented and you can fully depreciate it over 27.5 years. And it's only based on the property, not land value. Assuming I am not depreciating the chattels or heater, etc. just the building on a buy and hold.

If I buy a property for $110k this year, and land component is $10k, I can depreciate the $100k as mentioned above. 

1) If I sell in 20 years to another investor for $220k and the land is now $20k, their cost base for depreciation is now $200k and they also have full 27.5 years?  Does it ever end? If every 20 years a new person sells can this keep going forever?

2) If I sell for $220k in 20 years and then do a 1031, and buy a new property, does my new property I have a new 27.5 years to depreciate or am i somehow limited based on the first purchase?

Thanks! 

[Andrew Syrios]

No, the depreciation begins as soon as you buy the property. (Only the property value is depreciated, the land is not; usually the property value is 80% of the total assessed value and the land about 20%)

1) Any time the property sells, you "recapture" any depreciation you had during ownership and have to pay taxes on that along with capital gains (unless you do a 1031). And yes, every sale starts the depreciation schedule over again from the beginning.

2) My understanding is that yes, the new property also depreciates. Basically just the untaxed gain keeps accumulating. This is a big reason why it's hard for investors to sell properties they've owned a long time or 1031'd into unless they 1031 again.