Rehab Depreciation - Question

Hello,

How does depreciation work on rehabbed buy&hold properties? For example, I bought a house with hard money for $85,000, put ~$10,000 into repairs to bring the appraised value up to $135,000. I then refinanced at 80% of the new apr. value. When I depreciate this year, will I use the a) original purchase price, b) original purchase price + rehab $, c) the apr value at time of refianance, or d) other. This property is an SFR residential unit built in 1960 (not historic).



Thank you for your help!

Comments(1)

  • quickclay22nd March, 2006

    Thanks, that helped clear it up. So I should itemize the rehab to break it down into the various depreciable components, or just generalize the rehab as a rennovation since it was "mostly" the large scale type project that you used as an example. I really appreciate the help!

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