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SHirsch999

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Posts: 2
Reply with quote  #1 
Hi.  I bought a property in FL (currently live in NJ) about a year ago with the intention of renting it initially and them moving there.  Our plans changed over the past year and then changed again and the condo is back on the rental market.  We are currently using a property manager who found a renter yesterday (yay).  Our goal is not to make a profit, though this would be nice, but rather have someone else pay the mortgage for us.  Anyway, here are my questions:
- The unit was available for rent as of October 1st, but was not officially rented until yesterday and will not be occupied until this coming Friday.  Can we depreciate the unit starting in October, or does this not begin until the unit is rented or occupied? 
- Some repairs were made over the past month since being available for rent (new AC unit, rear sliding door fixed, new ceiling fan installed).  Are the costs of doing these deductible?
- I needed to travel from NJ down to FL to find the property manager, set up the repairs, and begin the rental process.  Is this deductible?

I am already aware of the other deductions associated with the month-to-month things, insurance, etc.  Thanks in advance for any help.
OHlandlord

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Posts: 3,737
Reply with quote  #2 
You need to see your tax accountant about these details.  There are 2 different ways to depreciate.  He can tell you which way you are doing it and when (how much of) your expenses can be depreciated.

Normally, all expenses to do with a rental property can be deducted.  However, your use of the property was interrupted.  Did you ever actually move into the property?  If not, how long was it vacant?  Was it initially rented, now rented again?  How long between rentals?  If not that long, it can be considered as a simple vacancy and use really wasn't interrupted.  Or was it never rented before?  If not, you may have to use the date it was available to rent.

Finally, the IRS does allow certain travel expenses pertaining to the rental.  Was your trip completely for the rental?  No sight seeing, tourist stops, etc?  You should have a time lime made for the trip to show that it was exclusively for rental purposes.  Otherwise, only a portion of the trip may be deductible.

SHirsch999

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Posts: 2
Reply with quote  #3 
Hi.  Thanks for responding.  In answer to your questions:
- We have never moved in to the property.  It has been vacant since we bought it almost exactly 1 year ago.  It was originally put on the market for rental at the time we bought it, but took it off the market about a month later.  We had changed our plans and were planning on moving there, but never did and our plans changed again.
- The trip I took down there was strictly made in order to get the condo ready for rental.  I did meet a friend of mine for dinner 1 night and went to the beach for sunset 1 night (after all, the condo is only 10 minutes from Clearwater Beach).  Other than those, the entire trip was spent working on the condo.

Thanks again!
OHlandlord

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Posts: 3,737
Reply with quote  #4 
If you never lived in the property and never rented it out until now, the date it was available for renting should be the in service date  Sounds as if you can take at least 90% of the trip off your taxes.  But make that time line just in case you are audited.  Trips are red flags, especially when it is to a warm sunny area close to a beach!
carlkathy

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Posts: 2
Reply with quote  #5 

question: am i required to fill out & sign a rent certificate for a renters taxes?

OHlandlord

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Posts: 3,737
Reply with quote  #6 
In most places, no.  You don't need to fill out anything for a renter's tax return.  I have heard of someplace that does allow renters a tax break (must be a state tax deduction - we don't have it here.)  So you'd have to check local taxes for this.  I suggest you call a local HUD office, the Housing Authority, or a local LL's association (or chapter of REIA) and ask if this is a requirement in your area.  Any local accountant could also give you this answer, but you may have him pressuring you do your taxes or to pay him for the consultation!  Maybe one would answer this one question for free though.
carlkathy

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Reply with quote  #7 

Thanks for the help!

Sam

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Posts: 563
Reply with quote  #8 

In MI, renters can deduct a % of rent on their state return.  All they need is the address and rent receipts, cancelled checks, etc. in case of an audit.  No type of paperwork or certificate is due from the landlord.  Not sure if other states require something special.

Ajitallbey

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Posts: 47
Reply with quote  #9 
A business acquisition of any size carries tax implications for the buyer that range from employment taxes to state sales tax liabilities. If you believe you've found the perfect business to buy, before you sign the purchase agreement first hire a tax attorney to review the seller's financial documentation, including federal, state and local tax returns. Neglecting to perform this critical step can put you at risk of tax liabilities years after the purchase.
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Jhonnsscott

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Posts: 11
Reply with quote  #10 
Some of the decision factors include how profitable your business is, and how much of those profits you want distributed to you versus re-investing the profits back into the business.
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prin1113ci

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Reply with quote  #11 
Forgiveness of a non-recourse loan resulting from a foreclosure does not result in cancellation of debt income . Bare trusts With a bare trust each beneficiary has an immediate right to both capital and income .

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shagydeep

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Posts: 18
Reply with quote  #12 

Hello,
No it is not deductible because you can only getting the property and for that any renovation wants to have done then it should be done by your end. So you cannot deduct this amount from original value of property...

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