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Updated over 6 years ago on . Most recent reply
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In contract for a 2nd home - 1st time landlord
Hello, I am in contract for a 2nd home, and plan to rent out my first one. The rental will be a condo and I plan to keep it forever. Are there any good reads on what to plan before converting it to a rental? I have done some research and I have some basic understandings and questions
1) Looks like I need to know a "conversion to rental date" Is this just any date I want to pick after the 2nd house closes? If my 2nd house closes on 9/30, should I use 10/1 as my 1st house's conversion date? Or say 12/1 which is after I have finished moving/cleaning/advertising and got a tenant signed? I guess my question is for tax purpose does it matter?
2) After converting to a rental, I understand the expense to get it ready to rent can be used to deduct rental income. Say if I incur $3000 to clean/fix etc and make it to a rent-able condition from now to end of 2018, and it rents out 1/1 2019, can I carry over the $3000 expense as a loss to deduct against 2019 rent?
3) for depreciation purpose, I need the original "structure" cost which I have in my first assessment from county.
4) I understand that if I sell in the future, I need the "fair market value at time of conversion" number. Say it converts on 10/1, is it sufficient to use redfin and zillow as an estimate? Or should I order a formal appraisal? Living in California, the annual assessment is limited to a ~2% annual increase, so the assessed value is not the current fair market value.
Thanks!!!