CPA or Tax Experts: 2018 House Hack/Rental Property Deductions?

[Gary F.]

It seems because the new 2018 Tax Reform laws are so new I can't seem to find real answers. I searched here and nothing for 2018 tax year came up. Maybe a CPA can chime in.  

Scenario:

Im renting out rooms in my primary residence. I will stay in one of the smaller rooms and rent the rest out.  I know I can only deduct a portion/percentage of the house used for the rentals. This will be most of the house since I'll only be using the small bedroom, tenants will be in the other rooms + the common areas.

Questions:

1) I can deduct the full costs of furniture used to furnish the rooms and common areas, yes?

2) Materials and labor to convert the living room into a master bedroom with bathroom is capitalized or 100% deductible in first year?  

3) Landscaping materials and labor capitalized or 100%?

4) Business use of vehicle capitalized or 100%? I know this gets really confusing.  Some sections of 179 say vehicles over 6000lb GVWT.  

[Michael Plaks]

Originally posted by @Gary F.:

1) I can deduct the full costs of furniture used to furnish the rooms and common areas, yes?

Yes to the rented rooms. Common areas furniture probably should be pro-rated, since you're going to use it, too. (The full deduction for the furniture is the courtesy of the tax reform, known as 100% bonus depreciation)

2) Materials and labor to convert the living room into a master bedroom with bathroom is capitalized or 100% deductible in first year?

Capitalized and then depreciated. Before you do this, consider that you may permanently undermine the value of your property by eliminating its living room. Traditional homeowners may not like it. Depends on the market.

3) Landscaping materials and labor capitalized or 100%?

It's capitalized, but then it becomes fully deductible under the same 100% bonus depreciation as applies to furniture. Not 100% though, as it needs to be pro-rated between your personal use and rental use. "The landscaping is not for me" is a foolish argument.

4) Business use of vehicle capitalized or 100%? I know this gets really confusing.  Some sections of 179 say vehicles over 6000lb GVWT. 

What business use of vehicle are we talking about for house hacking? Picking up materials at HomeDepot? Furniture delivery? There would be some driving, but nowhere close to 100%, I expect. You will probably end up using mileage allowance and not actual expenses that include depreciation. Depreciation rules for automobiles improved significantly, however I don't think it would apply to you.