Depreciation in CA?

[Charlene Placko]

I'm new here and new to REI, but I'm curious what the tax laws are regarding depreciation in CA. I know someone who has a property in CA and they said they weren't able to depreciate anything. They have a CPA doing all their taxes but I'm not sure why this is. They're just keeping the place so their family member has someplace to live, but I'd think they'd be able to depreciate it somehow...? Or does this only happen when it's sold?

[Steven Hamilton II]

Charlene,

If you are not renting a property for profit, such as below far rental value to a family member, than you can not deduct any of the expenses for it. If you are not taking in any rent you may consider this a second home and deduct mortgage interest and real estate taxes as if it was simply a second home.

That would be why they cannot depreciate it.

In some cases such as additional depreciation allowed on business(non-rental) assets you may take additional depreciation the first year.

To summarize:
They will not be able to depreciate it unless they are in a for profit activity. If they DO NOT charge rent they may deduct the additional interest and RE taxes.

-Steven the Tax Guy

Your guide to IRS laws, rules and regulations.