 Figuring your depreciation deduction you can figure your maker's depreciation deduction in one of two ways The depreciation is substantially the same both ways You can figure the deduction using either the depreciation method and convention that apply over the recovery period of The property or the percentage from the maker's percentage tables So in other words, you can basically kind of calculate the depreciation So if it's a double declining basis, you can kind of calculate the depreciation But the double declining in particular gets confusing especially when you throw in the half-year convention and whatnot So you could see you could use the percentage tables, which basically are you know They've short-cutted some of the calculations obviously in practice will probably use software to calculate it But we still want to have an idea of what's going to happen into the future and if we can calculate out into the future These these costs that also helps us to do projections because tax software often helps us for the current year and possibly into the next year But if it's a 30-year property or something, we might want it or any year property five-year property Well, we might want to project out further to make our decisions So in this publication, we will use the percentage tables for instructions on how to compute the depreciation You could see chapter four of publication nine four six if you so choose Residential rental property you must use the straight line method and a mid-month convention for residential rental property So the big stuff the actual property itself straight line Which is the most basic convention the first thing we would think of when we think of this concept of depreciating but it's the worst one for in terms in Comparison to to an accelerated method like double declining because we would rather get depreciation sooner rather than later Which makes sense from the IRS's perspective for real estate because although real estate the building deteriorates over time It's possible that the real estate of course goes up in value just due to the location Which is different than other pieces of equipment and stuff like that So it kind of makes sense that we wouldn't accelerate the depreciation but rather kind of depreciate it evenly Over the the useful life, which would be fairly long you would think right so in the first year that you claim depreciation The residential rental property you can claim depreciation only for the number of months the property is in use So I use the mid-month convention explained under conventions earlier So then you got the five seven fifteen year property for property in the five seven or seven year class Used the 200% declining balance So that's the one we get the better benefit method the double declining balance the accelerated method up front more complex to calculate But it's better for taxes because usually we get the benefit sooner, which is usually better It's also by the way Conceptually sound oftentimes from an accounting standpoint because if you buy something like a forklift You might say hey straight line isn't as accurate as double declining just to be fair because the forklift It's going to be more productive in the first first year than the late latter years Therefore I should allocate more of the cost and the beginning years when I get more of the benefit and then into the latter year So it's still a conceptually sound. It's not just a quite crazy wacky political, you know thing So any case so that's the double declining method and a half-year convention So however in limited cases you must use the mid-quarter convention if it applies We talked about the whole convention thing half year is the is the standard unless something funny happens You bought a bunch of stuff at the end of the year in which case you flop on over to mid half Mid-quarter so the property in 15-year class uses the 150 double declining method So that's accelerated but not as accelerated as 200 method and a half-year convention unless the mid-year convention applies So you can also choose to use the hundred and fifty percent double declining method for property in the five or seven year classes So in other words, they're giving you a little bit of leeway and the five or seven you could say I got two hundred percent Double declining I could default down to 150 But normally you wouldn't want to do that because we'd rather have the depreciation sooner rather than later unless We have we're expecting to have more income in the future than currently and therefore We're going to be in higher tax brackets in the future in which case Maybe it would be advantageous to delay the depreciation so that we can take it when we have higher income or something possibly So the choice to use the 150 method for for one item in a class of property applies to all property in that class So then you have to kind of think about it as the whole class total if you're flopping it over from 150 to 200 to 150 placed in service during the tax year you make this election on form four five six two part three column F Enter 150 double DB once you make this election, you can't change it You can't be flip-flopping after you've started a depreciation method got to be consistent So if you use either the 200 percent or 100 for percent DB double declining balance Method figure your deduction using the straight line method and the first tax year That the use of the straight line method gives you an equal or larger deduction Then the use of the 200 or 150 DB method so it gets a little bit funny when you when you think about the calculations From straight line to double declining because what happens is like like if you had a well We'll probably if you had a straight line method That was for an entire year Then it would come out to the same number as a double declining balance with a half year convention So that kind of confuses people Because that first year looks like a straight line method any case You can you can also choose to use the straight line method with a half year or mid quarter convention for five seven or 15 year Property so now we have the option 200% that's probably the best most of the time But sometimes maybe we want to default down to the 150 if we think we're gonna make more money in future periods or something or possibly all The way down to straight line which means it's gonna take us longer Or we're gonna get more depreciation at the end or you know, then we would under the double decline it So the choice to use the straight line method for one item in a class of property applies to all property in that class That is placed in service during the tax year of the depreciation You elect the straight line method on form four five six two part three column F enter S dash L