I have a new client who owns a rental property.

One-half of the building is a store. The other

half is residential apartments. The previous preparer has 1/2 of the building set up as non-residential property and is depreciating for 39

years. The other 1/2 is set up as residential property for 27.5 years. The income from the store and the apartments is almost equal. Is the

set-up correct? If not, how can I fix it?

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Basic stuff:

http://www.irs.gov/pub/irs-pdf/i4562.pdf

taxbilly

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Since less than 80% of the income is not from dwelling units, I believe that the whole property would fall under non residential real property with a 39 year class life for the whole property not including land.

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