1.What is Schedule E depreciation (Rental property)?

15- Paul found a renter for his father's house on August 1. The monthly rent is $600, and the lease agreement is for one year. The lease requires the tenant to pay the first and last months' rent and a $600 security deposit. The security deposit is to be returned at the end of the lease if the property is in good condition. On August 1, Paul received $1,800 from the tenant per the terms of the lease agreement. In November, the plumbing froze and several pipes burst. The tenant had the repairs made and paid the $300 bill. In December, he reduced his rental payment to $300 to compensate for the plumbing repairs. Paul provides you with the following additional information for the rental in the current year.

Property taxes$770

Other maintenance expenses285

Insurance expense495

Management fee350

Depreciation (to be computed)?

Local practice is to allocate 10 percent of the fair market value of the property to the land. (See 8 for basis information.) Paul makes all decisions with respect to the property.This rental activity qualifies as a trade or business under the Internal Revenue Code for purposes of the Qualified Business Income deduction.

8-On January 15, of the current year, Paul's father died. From his father's estate, he received stock valued at $30,000 (father's basis was $12,000) and his father's house valued at $90,000 (father's basis in the house was $55,000).

Schedule E - Rental 1 15 Rent 600 Home Basis $ 55,000.00 Less Expenses: Land 5,500.00 1 15 Property taxes 670 Enter as a positive Building 49,500 1 15 Maintenance expenses 285 Enter as a positive 15, 8 Depreciation $ BB Q No. 6 15 Insurance expense 495 Enter as a positive 1 15 Management fee 350 Enter as a positive 10% 1 15 Plumbing repairs 300 Enter as a positive 90% 1 15, 8 Depreciation expense Enter as a positive 0.000% Table 3 (p.10-43) Total Schedule E Expenses 2,100 Schedule E Net Revenue (1,500) 1 10 Schedule E Sub-S corp 1,000 Schedule E - Total (13,500)Month Property Placed in Service Year 2 3 5 6 7 9 10 11 12 3.485% 3.182% 2.879% 2.576% 2.273% 1.970% 1.667% 1.364% 1.061% 0.758% 0.455% 0.152% 2-9 3.636 3.636 3.636 3.636 3.636 3.636 3.636 3.636 3.636 3.636 3.636 3.636 10 3.637 3.637 3.637 3.637 3.637 3.637 3.636 3.636 3.636 3.636 3.636 3.636 11 3.636 3.636 3.636 3.636 3.636 3.636 3.637 3.637 3.637 3.637 3.637 3.637 12 3.637 3.637 3.637 3.637 3.637 3.637 3.636 3.636 3.636 3.636 3.636 3.636 13 3.636 3.636 3.636 3.636 3.636 3.636 3.637 3.637 3.637 3.637 3.637 3.637 14 3.637 3.637 3.637 3.637 3.637 3.637 3.636 3.636 3.636 3.636 3.636 3.636 15 3.636 3.636 3.636 3.636 3.636 3.636 3.637 3.637 3.637 3.637 3.637 3.637 16 3.637 3.637 3.637 3.637 3.637 3.637 3.636 3.636 3.636 3.636 3.636 3.636 17 3.636 3.636 3.636 3.636 3.636 3.636 3.637 3.637 3.637 3.637 3.637 3.637 18 3.637 3.637 3.637 3.637 3.637 3.637 3.636 3.636 3.636 3.636 3.636 3.636 19 3.636 3.636 3.636 3.636 3.636 3.636 3.637 3.637 3.637 3.637 3.637 3.637 20 3.637 3.637 3.637 3.637 3.637 3.637 3.636 3.636 3.636 3.636 3.636 3.636 21 3.636 3.636 3.636 3.636 3.636 3.636 3.637 3.637 3.637 3.637 3.637 3.637 22 3.637 3.637 3.637 3.637 3.637 3.637 3.636 3.636 3.636 3.636 3.636 3.636 23 3.636 3.636 3.636 3.636 3.636 3.636 3.637 3.637 3.637 3.637 3.637 3.637 24 3.637 3.637 3.637 3.637 3.637 3.637 3.636 3.636 3.636 3.636 3.636 3.636 25 3.636 3.636 3.636 3.636 3.636 3.636 3.637 3.637 3.637 3.637 3.637 3.637 26 3.637 3.637 3.637 3.637 3.637 3.637 3.636 3.636 3.636 3.636 3.636 3.636 27 3.636 3.636 3.636 3.636 3.636 3.636 3.637 3.637 3.637 3.637 3.637 3.637 28 1.97 2.273 2.576 2.879 3.182 3.485 3.636 3.636 3.636 3.636 3.636 3.636 29 0.152 0.455 0.758 1.061 1.364 1.667