Depreciation

[Daniel H.]

If I purchase a home for $25,000 cash, then spend $15,000 to fix it up, then refinance at an appraised value of $100,000(just an example), would depreciation be based on the $25,000 plus improvements or would it be based on the $100,000?(appraised value)

[Jon Klaus]

It will be based on your cost basis, not the appraisal. $40k would be your basis. Subtract land value and what you have left is the amount you can depreciate.