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Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 28084
Experience:  Taxes, Immigration, Labor Relations
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Starting a small business & planning to build a building on

Customer Question

Starting a small business & planning to build a building on our current residential property, which is 16 acres, home and 2 outbuildings. If we build a business building & allocate an acre of land specifically for the business do we have to depreciate the building? (Sole Propietor LLC) If we do not depreciate the building, what happens when we sell our home and the acreage and all bldgs.? Will IRS still have us recapture depreciation because it was allowable?? Or can we just run a business without rent or building cost deducted?
JA: The Accountant will know how to help. Is there anything else the Accountant should be aware of?
Customer: We just don't want to complicate anything eventually when we do sell our place. The business building and acre would never be sold off separately. We want this acre kept in our name, not the LLC name so if we close the business that the building would become a personal building and the acre still has our name on the deep, not the business name.
JA: OK. Got it. I'm sending you to a secure page on JustAnswer so you can place the $5 fully-refundable deposit now. While you're filling out that form, I'll tell the Accountant about your situation and then connect you two.
Submitted: 6 months ago.
Category: Tax
Expert:  Lev replied 6 months ago.
If we build a business building & allocate an acre of land specifically for the business do we have to depreciate the building?Depreciation is an income tax deduction that allows a taxpayer to recover the cost or other basis of certain property. It is an annual allowance for the wear and tear, deterioration, or obsolescence of the property.Depreciation begins when a taxpayer places property in service for use in a trade or business or for the production of income.
Expert:  Lev replied 6 months ago.
If we do not depreciate the building, what happens when we sell our home and the acreage and all bldgs.?You will report separately the sale of personal property and your business property - as two separate assets.You will have to adjust the basis of the property by depreciation allowed or allowable regardless if that deduction was claimed on not.Let me know if that answered your questions?

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