We operate residential rental property as part of our main business. We are a pass through entity. We have properties and equipment that we own. We're wondering if the depreciation should begin when the property is ready for service and not when the property was rented. Please advise.

ANSWER

The BIDaWIZ Team's Answer:

Yes, that is correct. You begin to depreciate your property when you place it in service for use in your trade or business or for the production of income. You place property in service when it is ready and available for a specific use, whether in a business activity, an income-producing activity, a tax-exempt activity, or a personal activity. Even if you are not using the property, it is in service when it is ready and available for its specific use. Reference IRS Publication 946.