section 216 form, depreciating the condo ( building part)

[shsamardar]

HI

I am a canadian working in USA with H1B visa.

for usa tax purposes , I am US resident

For CCRA, I am non resident

I have a condo in Vancouver and rented that. I am reporitng that in Schedule E for USA and section 216 for Canada.

For schedule E, I am depreciating the building ( not land ) of condo ( portion that belongs to me in the bulding based on canada propoerty tax estimation )

I want to know for section 216, do I have to depreciate the building or for canada , it is not allowed?

I was living in the condo before I moved to USA and started renting that in Jan 2005.

If I can depreciate the building in section 216, Is it optional or mandatory? If I ca depreciate that, I know I can bring down the CDN taxes now, but how about selling the propoerty in future?

Thank you

[nelsona]

For US return you must depreciate, for Cdn return it is optional.

When you depreciate you will have to recapture whebn you sell. So some of the taxes are cap gains and some ordicary income.

[shsamardar]

Thank you for reply

you said:
So some of the taxes are cap gains and some ordicary income.

for a novice like me, can you explain what portion of selling price will be ordinary and which part capital gains.

example: buying price: 100k
selling price 150k ,
during rental, total of depreciation reported : 20k

Thanks
Shahram

[nelsona]

I mispoke.

It would all be cap gains, but the depreciation would reduce the cost basis, increasing your cap gains.