Is the Deed Required For Depreciation in California?

[Eric Welty]

My question is for a single family residence do I need the deed in my name to gain the advantage of depreciation on my taxes? As I understand it in Missouri one can depreciate a SFR on their own tax return even if the deed is not in their name, assuming they are the one paying the mortgage. I'm buying a SFR 'subject to' here in CA, I'm a CA resident, and my company is located here in CA.

Thanks in advance for any input and Happy New Year!

[Michael Plaks]

@Eric Welty

Sorry, sounds like you've heard of a lot of industry terms and creative strategies but are not really sure on how it all works. This is a complicated deal you're trying to pull off, and new investors are usually better off sticking to the simpler ones. If you're determined to proceed on this deal, I highly recommend you find an experienced local investor to hold your hand thru it. The risk of losing a lot of money on this one is high.

To your depreciation question: the person entitled to depreciation is the person who is considered the legal owner. Usually, but not always, it is the person whose name is on the title. Whose name is on the mortgage does not directly affect the ownership and depreciation. In your case, the little details on how it is structured can change who is considered the owner. Some lease option deals are considered leases, and others are considered sales. Did I mention it's a complicated thing?