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a residential rental property is acquired during the first month of the taxable year, at a...

a residential rental property is acquired during the first month of the taxable year, at a total cost (including transaction costs) of 1.2 million. Of this amount, $200,000 is properly attributable to land. determine the annual depreciation allowance for the first year and for each of the ensuring nine years

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Answer #1

Assumption: Country is US

Residential Rental Property are depreciated at 3.636% per year for 27.5 years

If it is purchased during first month, 1st year's depreciation will be 3.485%

Above Rate will be apllied ONLY on Value of Building and NOT ON LAND.

Value of Building = Total Cost-Amount of Land = 1200000-200000 = $1000000

Depreciation for 1st year = Value of Building*1st Year's Rate = 1000000*3.485% = $34850

Depreciation for ensuring 9 years = Value of Building*Genral Rate = 1000000*3.636% = $36360

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