Liam Hernandez (38) paid $112,000 for a single-family home on July 1, 2020 and immediately placed it in service as a residential rental property. At the time, the land was valued at $10,000. The property generated $6,000 in rental income for the year. Liams only expenses consisted of depreciation, $500 in insurance, and $750 in real estate taxes. Liam is not a real estate professional, but he does actively participate in his rental real estate activity. He did not provide any personal services during the year, although he has notified his tenant that he will make minor repairs to the property as needed. Liam has no other passive income or losses.

What amount should Liam claim for depreciation on his rental property for 2020? You may refer to the depreciation Table A-6 from IRS Publication 946, How to Depreciate Property, to assist you in answering this question. The table is shown below.

$1,700

$1,867

$3,555

$3,903