depreciate investment (non-rental property)

I purchased a second home for my elderly parents to live in. I charge them no rent and am doing this to help them out. Hopefully the home increases in value over time, so that it is an investment for me. As the home is not actually rental property, can I claim depreciation on it as investment property?

asked 05 Apr '11, 05:56

mark
51●3
accept rate: 0%

edited 09 Apr '11, 06:37

Kristy M. W.
983●9

One Answer:

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Hi Mark,

Thank you for your question.

Unfortunately, no, you would not be able to claim depreciation on this home. As per IRS Pub 946 (How to Depreciate Property): http://www.irs.gov/pub/irs-pdf/p946.pdf , your scenario does not meet the following criteria:

“To be depreciable, the property must meet ALL the following requirements.

It must be property you own.
It must be used in your business or income-producing activity.
It must have a determinable useful life.
It must be expected to last more than one year.”

In the absence of additional information, you do not meet the second test, and therefore do not qualify to claim such an expense.

Although a commendable gesture, it is not a tax-deductible one.

Best of Luck!

P.S. If itemizing your deductions, don’t forget to claim the real estate taxes you paid on this property during the year on Schedule A, Line 6: http://www.irs.gov/pub/irs-pdf/i1040sca.pdf, as this property was not used for business.

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answered 09 Apr '11, 06:36

Kristy M. W.
983●9
accept rate: 4%

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