Practice Quiz

Florida Real Estate Exam

Category - Florida

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Smith purchased an older apartment house as her first real estate investment.  This property had several owners and they all claimed depreciation deductions on their federal income tax returns because of the subject property.  When Smith files her return, she can depreciate the property:

  1. Based on the purchase price of the land and improvements
  2. Without regard to the total depreciation deducted in the past
  3. If she makes allowance for the depreciation taken by prior owners
  4. Provided she uses the same economic life as the first owner of the property
Explanation
Answer B - The purchase price of the property is the basis for calculating depreciation. The fact that the previous owner had depreciated the property has no effect on the new buyer's cost basis.

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