Registered: 1201759818 Posts: 3
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My tenants just moved after 2 years. The carpet had a few stains when they moved in, and they left a lot more when they moved out -- spills and pets. I had the carpet cleaner come back to re-treat the spots and it looks a bit better, but still visible -- especially where the cats threw up their food and the food dyes left a reddish spot. There is also a small orange stain (possibly felt marker) on the bathroom linoleum. My carpet is now 5-1/2 years old, and the stains from the previous tenants were clearly noted on the move-in checklist.
Unfortunately, I didn't get a signed copy of the move-in checklist back from the tenants and just considered if they didn't give it back, they accepted the move-in condition as accurate. Now I'm wondering if I made a big mistake. I don't know how I would prove in court that I ever gave them a copy in the first place. While doing the final move-out inspection I did ask the tenant if she felt that I had given her an accurate description of the move-in condition, and if she agreed that it was, she needed to sign it. She agreed and did sign it, as well as backdating to her move-in date. We completed the move out checklist, and I noted that I was unsure about the condition of the carpets and the stain on the floor. I told her I was going to go over the carpet with my own carpet machine and would also see what I could do to remove the linoleum stain (at no cost to her). Although the floor stain is small, it is certainly visible, and the additional spots on the carpet all add up to a bit of a "shabby" look for my 5-1/2 year old property. I have a $250 pet deposit and a $1500 security. Keeping $250 for the pet stains isn't going to offset replacement cost enough to make it possible, so I don't think you can you keep the deposit if you aren't going to replace the carpet (I live in Calif.)? If I decide to use the security deposit to replace any of the carpet, should it be prorated and how do I do that? I think the life of rental carpet is assessed at 8 to 10 years? Lastly, if the move-in checklist issue could be construed in any way as questionable, am I better writing this one off as my shortcoming rather than taking a chance of losing in court?
Registered: 1169270040 Posts: 3,815
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If you will replace the carpet, you must charge no more than the depreciated value of the carpet. How many years are you using on your taxes on the property depreciation schedule for the carpet on this property? You have to use that number of years to depreciate, not 8-10 years.
You must use the specific number of years that you are claiming for the IRS. Look at this schedule from last year's taxes and at the original price of carpet (it is listed there as well). Divide original carpet price by the yearly amount and it should tell you the number of years you are using to depreciate. The number is probably 5, 7, or 10. If it is 5, you cannot deduct anything since the carpet has already been completely depreciated (it is now officially worthless, having used up its remaining life). If it is more than 5 years, do the following: Step 1) Take the number of years of depreciation (from the IRS schedule) - the age of the carpet (5.5) = the remaining useful life of the carpet Step 2) Take the remaining useful life of the carpet / the number of years of depreciation = the number of years of depreciation (in decimal form) Step 3) Take the number of years of depreciation (in decimal form) x the cost of carpet replacement = the cost you may charge to the tenant. An example: Carpet is 5.5 yrs old, depreciated over 10 yrs, new costs $5000 10 - 5.5 = 4.5 yrs. 4.5 / 10 = .45 (tenant is responsible for 45% of cost) .45 x $5000 = $2250 depreciated cost to charge tenant You have a signed move-in sheet (no matter when she actually signed it.) She signed it voluntarily. Use the above to figure it out if you will replace the carpet. If you don't replace it, don't charge them. Do not use a different number of years than your IRS schedule. This would be fraud. For instance, if you used the example above to charge the tenant, when you actually had used 5 years for the IRS, you would be defrauding the tenant out of $2250. You might get by with it, but if they sued you and subpoenaed your taxes!!! (You could be in trouble with the court & the IRS.) The IRS is allowing you to deduct the costs of that improvement to your property, thereby setting its value. Use it. As for the small stain on the linoleum, (this might not work but...) try hair spray (if it is ink) or a product called Motsenbocker's Lift Off 3 Graffiti Remover or a product designed to remove hair dye from surfaces. One of those might remove it or make it less noticeable. As for the pet deposit, you do have receipts for professional carpet cleaning and you will probably have to itemize another to wash walls and woodwork to remove pet stains (Exact tasks, number of hours work, cost per hour). That should use up the pet deposit. Remember to send the copies of receipts with the statement within 21 days for CA. What I do with the condition statement for move in is to have them sign it at lease signing. There is a notation on it that they have so many days to dispute, in writing, any condition listed therein. If no dispute is filed with me, the list is signed and is final.