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Frequently Asked Tax Questions

Sale or Trade of Business, Depreciation, Rentals - Depreciation & Recapture

  1. Can the entire acquisition cost of a computer that I purchased for my business be deducted as a business expense or do I have to use depreciation?
  2. What kinds of property can be depreciated for tax purposes?
  3. What form and line do I deduct the standard mileage rate for my business travel and do I need to figure depreciation of the vehicle, too?
  4. I have a home office. Can I deduct expenses like mortgage, utilities, etc., but not deduct depreciation so that when I sell this house, the basis won't be affected?
  5. We have incurred substantial repairs to our rental property: new roof, gutters, windows, furnace, and outside paint. What are the IRS rules concerning depreciation?

Rev. date: 3/29/2011

Can the entire acquisition cost of a computer that I purchased for my business be deducted as a business expense or do I have to use depreciation?

The acquisition cost of a computer purchased for business use:
NOTE:  Increased section 179 limits. The maximum section 179 deduction you can elect for qualified property (section 179 property) placed in service in 2009 is  $250,000 ($285,000, for qualified zone and qualified renewal property). This limit is reduced by the amount by which the cost of section 179 property placed in service during the tax year exceeds $800,000. You may also see the IRS site for Code Section 179 for the expanded definition.

Rev. date: 1/1/2011

What kinds of property can be depreciated for tax purposes?

To be depreciable, the property must:
The kinds of property that can be depreciated include, but are not limited to, machinery, equipment, buildings, vehicles, and furniture. Some intangible property may also be depreciable (e.g. patents).

Rev. date: 1/1/2011

What form and line do I deduct the standard mileage rate for my business travel and do I need to figure depreciation of the vehicle, too?

The standard mileage rate:
Instead of the standard mileage rate, you can use the actual expense method. If you use this method, you need to figure depreciation for the vehicle.
The business use of an automobile is claimed on:

Rev. date: 1/31/2011

I have a home office. Can I deduct expenses like mortgage, utilities, etc., but not deduct depreciation so that when I sell this house, the basis won't be affected?

If you qualify, for the part of your home that is a home office:
If you do not claim depreciation on that part of your home that is a home office, you are still required to reduce the basis of your home for the allowable depreciation of that part of your home that is a home office when reporting the sale of your home.

Rev. date: 1/1/2011

We have incurred substantial repairs to our rental property: new roof, gutters, windows, furnace, and outside paint. What are the IRS rules concerning depreciation?

Replacements of roof, rain gutters, windows, and furnace on a residential rental property:
Repairs, such as repainting the residential rental property:
NOTE:  Repainting your property, fixing gutters or floors, fixing leaks, plastering, and replacing broken windows are examples of repairs. If you make repairs as part of an extensive remodeling or restoration of your property, the whole job is an improvement. In that case, you should capitalize and depreciate the repair costs as the same class of property that you have restored or remodeled as discussed above.