I bought a duplex at a tax auction for 25k. The previous sale was 5 years ago for 55k. I put in 2 months of work and about 5k and now rent it for $650 + utilities each side. It could be sold for about 60k. What can I use as a depreciation basis for taxes? I would like to get as much out to reinvest as possible and therefore like to use the highest depreciable value.
Answer
It sounds like your basis is around $30,000 less any depreciation you have already taken. Wait a year to sell and the profit will be taxed at Capital Gain rates versus Ordinary Income rates.
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