Bonus Depreciation: Tax value or Purchase Price

[Trent Barga]

Hoping one of you great people can clarify something for me. Looking at bonus depreciation and wondering if it is based on the county assessed value or purchase price?

We purchased a commercial building for $420k and the county has the improvements at $115k. I my mind doing a bonus depreciation wouldn't make sense if it is only on the $115k value. We have 6 other single family homes and have 2 high income earners so trying to bring our taxes down as much as possible.

Thanks!

[Natalie Kolodij]

Quote from @Trent Barga:

Hoping one of you great people can clarify something for me. Looking at bonus depreciation and wondering if it is based on the county assessed value or purchase price?

We purchased a commercial building for $420k and the county has the improvements at $115k. I my mind doing a bonus depreciation wouldn't make sense if it is only on the $115k value. We have 6 other single family homes and have 2 high income earners so trying to bring our taxes down as much as possible.

Thanks!

"Doinga  bonus depreciation" doesn't really make sense- I'm guessing you mean doing a cost segregation...to separate out components that qualify for bonus depreciation. 

Also- if you are both high income earners.....your passive losses from rental properties will not reduce your taxable income. 

If you apid $420k your depreciable basis won't be $115k. You need to divide that $115/ the total value of the property per the assessor. Then whatever that % is is what you'll apply to the $420k to get your depreciable basis. 

You may want to work with a good tax strategist.