ceregon- a serious answer to your depreciation question
Posted by
spamlet
Mar 10 '11, 11:58
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You get to depreciate the house because it is an asset of the business like any other asset (computer, lawn mower, whatever). Since you are running a business, you are in the business part of the Internal Revenue Code whether you are a corporation, partnership, or person.
Like you said, because of this you will be taxed on all of the proceeds if you sell after the property is fully depreciated. That would also be true if you were incorporated.
The difference for you is that everything is reported on your personal return and capital gains are taxed at a lower rate. If you were incorporated, there is no difference in the rate of capital gains and ordinary income.
A big part of the problem in restructuring the tax code is the vast majority of business are now not incorporated and the results are reported on a person's personal return. It's hard to reform one without the other because of the huge inequity that may result.
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