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4Rent

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Posts: 32
Reply with quote  #1 
I purchased a rental property last Fall & am doing some repairs.  It won't be available for rent until late Spring 2012.

According to IRS Publication 527:
"You begin to depreciate your rental property when you place it in service for the production of income. You stop depreciating it either when you have fully recovered your cost or other basis, or when you retire it from service, whichever happens first."

Does anyone know if this includes utilities and property taxes paid before the property is placed in service?
OHlandlord

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Posts: 3,737
Reply with quote  #2 

Some of those expenses are deductible, but not at the same depreciation schedule.  Now you count those expenses over the life of the property rather than 5 or 7 years (as a repair would).  They essentially are counted as part of the cost of the property (preparing it to be a business).  Hold off on whatever repairs you can until after you get it rented.  Then you can count them as repairs (100% deductible) or depreciated improvements (usually over 5 or 7 yrs).

4Rent

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Posts: 32
Reply with quote  #3 
I got the asset part figured out.  (i.e. appliances, carpet, fencing, etc.)

I just wasn't sure about the taxes & utilities paid before I was able to get it to rented out.  Where does this part apply to/fall under when filing the tax return?

OHlandlord

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Posts: 3,737
Reply with quote  #4 

You need to consult a tax accontant on how to itemize these items on your tax schedule.  He or she can tell you specifically how to list these to meet the watchful eyes of the IRS.  Just as we often suggest that people seek the advice of professional attorneys, so goes the advice to seek a professional tax accountant versed in rentals.  The complete tax code is at 13,458 pages long.  Only a pro can figure it out now and you surely don't want to get this wrong considering the penalties.

prin1113ci

Registered:
Posts: 86
Reply with quote  #5 
All of those costs must be added to the basis in the home and then depreciated . A taxpayer may incur expenses for the purposes of a rental business before that business starts .


mobilt bredbÄnd priser
richardson03

Registered:
Posts: 10
Reply with quote  #6 
I agree that some of the expenses are deductible.Well buying a rental property really has a lot of problem but if you over come all those issue well rewards are waiting.I remember some people in Finland where they are always having a problem financially and most of them have a credit at http://www.sergel.fi/ the good thing is that some of them are already paid and now they are really happy being a debt free.
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