2 family home converted from one unit of rental to total rental

[lbones]

I have a client that owns a two family home and has been renting one of the units for several year while living in the other unit as their personal residence.  They have now purchased another home for their personal residence and are renting both halves of the 2 family.  How do I handle the depreciation of the new unit.  As a separate unit in the same building?

[itonewbie · Accepted solution]

Since it is separate from the other home, it would be depreciated separately as a dwelling unit based on the lesser of (a) the owner's adjusted cost basis and (b) the fair market value on the date it's placed in service.

Or are you saying the two home are now combined and rented as one unit?

[lbones]

This is a single building up and down.  Personal residence on the 1st floor and rented the 2nd floor.  Now they are going to rent both floors.  Have been depreciating 50 of building.