Reply to rental property income and expenses

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[quote=Anonymous][quote=Anonymous]i own a rental property in MD. this is my first time being a  landlord and 2016 was the when I had my first tenant.

can someone explain how depreciation works for an investment property? how does the CPA calculate depreciation? based on my purchase price? something else? [/quote]

At the end of the year they will add up all your receipts for repairs, advertising, cleaning, credit checks, taxes paid, mortgage, to offset your tax liability. Even though I get almost twice the amount of rent as my mortgage I've never paid taxes.

Based on your purchase price I believe there's a depreciation factor the longer you own it.  I would do a consultation with your CPA so you know what kinds of thing you need to save and do. If you end up selling it you will get hit with the investment property tax, but if you end up living in that home for 2 years before you sell it you could avoid that because that would be considered your primary home at that point.  Again talk to your CPA.[/quote]

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