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What is the MACRS deduction for year 1 on the apartment building 27.5 year property that you acquired as an investment on Auguat 8 2007 at a cost of 5000000 and an estimated salvage value of 100000?
Wiki User
∙ 14y ago
For the necessary tables to find the depreciation deduction, go to www.irs.gov/formspubs for Publication 946: How to Depreciate Property. MACRS is Modified Accelerated Cost Recovery System. Under MACRS, residential rental property uses the General Depreciation System (GDS) depreciation with the Mid-Month Convention and Straight Line Method.
Under Mid-Month Convention, all property placed in service is treated as though it had been placed in service at the mid-point (halfway through) the month.
In the Publication 946 Appendix, go to Table A-6: Residential Rental Property Mid-Month Convention Straight Line - 27.5 Years. The percentage in the first year for property placed in service in August is 1.364 percent. The deduction for the first year is $500,000 multiplied by 1.364 percent and then multiplied by 4.5 (number of months in service: 4 months plus 1/2 of August) and divided by 12 (total months of the year).
The deduction is $2558.
Wiki User
∙ 14y ago
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