Question

5. David’s uncle, Donald died on March 22, 2013, leaving David his entire estate. Included in the estate was Donald’s house (1921 Hickox Street, El Paso, TX 79901). Donald’s basis in the residencewas $230,000. The fair market value of the residence on the date of his death in 2013 was $314,000. David has used the property as a rental property since he received it and has managed it himself, however he is not a real estate professional. To compute the depreciation on the house, David has allocated $20,000 of the property’s basis to the land and the remaining amount to thehouse. He has depreciated the house using the MACRS rules and conventions applicable to residential real estate. David collected $36,000 rent in 2018. The house was occupied during the entire year. He did not pay any contract labor that would require form 1099 for work related to this rental house. The net income from this activity qualifies for the Qualified Business Income Deduction. He incurred the following expenses related to the rental house during the year:

Property Insurance   $3,150

Property Taxes $3,920

Maintenance $4,980

Depreciation ????

What is the depreciation?

Answer 1