Oliver bought a rental property in 2018. He paid $100,000 cash and assumed a mortgage of...
Oliver bought a rental property in 2018. He paid $100,000 cash and assumed a mortgage of $75,000. At the time of purchase, the land was valued at $10,000. What is Oliver's depreciable basis in the property? $90,000 $100,000 $165,000 $175,000
Homework Answers
Hello! Below is the answer.
We first need to find the total value of the property. Oliver paid $100,000 in cash and also took $75,000 mortgage. So the total cost to Oliver is $175,000.
Out of this, the value of land was $10,000. As we know, land is non-depreciable. So the remaining property will be depreciable.
The value of the remaining property without land is $165,000. Hence the depreciable basis in the property is $165,000.
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