40.17 Depreciation of Office in Cooperative Apartment

If your home office meets the tests discussed in 40.12, you may deduct depreciation on your stock interest in the cooperative. The basis for depreciation may be your share of the cooperative corporation’s basis for the building or an amount computed from the price you paid for the stock. The method you use depends on whether you are the first or a later owner of the stock.

You are the first owner.

In figuring your depreciation, you start with the cooperative’s depreciable basis of the building. You then take your share of depreciation according to the percentage of stock interest you own. The cooperative can provide the details needed for the computation.

If space in the building is rented to commercial tenants who do not have stock interests in the corporation, the total allowable depreciation is reduced by the amount allocated to the space used by the commercial tenants.

You are a later owner of the cooperative’s stock.

When you buy stock from a prior owner, your depreciable basis is determined by the price of your stock and your share of the co-op’s outstanding mortgage, reduced by amounts allocable to land and to commercial space.