Author Topic: First Year Landlord Tax Question  (Read 1820 times)

epps

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First Year Landlord Tax Question
« on: January 04, 2020, 11:16:34 PM »
I have searched a good amount and found some great resources in previous threads, but I have been looking for an answer for a specific question I'm hoping someone can shed some light on:

If I go from renting a single room in my primary residence, to renting two rooms in my primary residence, to renting the entire residence over time (for simplicity sake, three separate years that don't overlap and changeover on January 1st), how does depreciation look in all three of these years?

Follow up- What about the scenario where the change between one room to two rooms and two rooms to whole house overlap in a tax year (not the simplified January 1st change above)?

Appreciate any insight (beyond talking to my accountant- I'm looking for information or resources so I can have an educated conversation with a professional to make sure things are being done correctly).

waltworks

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Re: First Year Landlord Tax Question
« Reply #1 on: January 06, 2020, 08:34:04 AM »
It will be prorated by the portion of the year that the home was occupied. Not really too complex, at least when I did something similar years ago in Turbotax. Tax laws might have changed in the interim, of course, so your accountant will be the final word on the question.

-W

epps

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Re: First Year Landlord Tax Question
« Reply #2 on: January 13, 2020, 04:55:58 PM »
Thanks! I appreciate the feedback. That's what I have gathered, I just wasn't sure if there is any fancy trick involved when it comes to the depreciation period (i.e since it is prorated, can the depreciation extend beyond 27.5 years since you are only taking the portion that is the rented space when renting by the bedroom/ starting the schedule after that for the rest of the house once the entire place is converted)

waltworks

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Re: First Year Landlord Tax Question
« Reply #3 on: January 13, 2020, 07:36:46 PM »
There might be I suppose, but I doubt it's worth spending a bunch of time worrying about unless you're doing your own taxes and VERY concerned about what's going to happen 30 years from now or something. If you have an accountant doing it, just set them loose.

-W

thorto0803

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Re: First Year Landlord Tax Question
« Reply #4 on: January 17, 2020, 10:13:03 AM »
I am a tax accountant, but Real estate is not my area, so take this with a grain of salt. I would assume that each new room/space that begins taking depreciation would essentially be segmented into it's own useful life. so each time you add a room, start a new series of 27.5 years of depreciation for that specific addition. This means that the portions for the last couple of rooms will not be fully depreciated until after the first room is.