We own and operate a residential rental business. If we sell property to an individual and then buy it back from them, can we still depreciate the property?

ANSWER

The BIDaWIZ Team's Answer:

Yes, that is correct. The basis of the property bought back is the purchase price and would be depreciated accordingly. It doesn't matter that the company purchased the property back. This is referenced in IRS Publication 551. Please be mindful though of depreciation recapture on the sale of residential rental property for capital gains purposes.