Can I take items from rental property that I own?

Question

I own a rental property. Over time, I have purchased various items for the rental property and taken tax deductions when I did so. For example, I purchased a lawn mower for the rental that tenants cut with. I have purchased refrigerators and stoves, etc. Legally speaking, am I ever allowed to take those items and keep them for myself?

I plan to buy my tenant a new fridge. Am I allowed to keep the old fridge for personal use? What are the legal guidelines here if any? Looking for advice, thanks!

I plan to buy my tenant a new fridge. Am I allowed to keep the old fridge for personal use? What are the legal guidelines here if any? Looking for advice, thanks!

Nathan Gesner · Answer

I agree with John. If it's a one-time replacement issue, you should be fine. If you're purchasing items and claiming they're for the investment property but then using them elsewhere, that would be a moral and legal problem.

John Warren · Answer

@Diego StPhillip you should speak to your attorney and accountant for actual advice. I am sure the IRS does not try to track down lawn mowers, but if you are not careful this can be a slippery slope. For instance, if you were ever audited you would want to make sure you weren't falsely claiming cars, appliances, and other large purchases that are very easy to track. At the same time, I am thinking an old fridge that you just replaced probably isn't a huge deal. If it was just going to a recycling program. Again, always think in terms of an audit and how would you explain this if you were ever audited.

JD Martin · Answer

Once you have fully depreciated an item, as long as it is something that cannot be recaptured I don't think you'd be breaking any laws (assuming you bought the item for the rental and it was used as such). In your example, you are purchasing and expensing the refrigerator and junking the old one, so if it's in the junkyard or in your storage shed I can't see how it makes a difference.

@Natalie Kolodij will know the answer to this, though 🙂

Percy Matsunaga · Answer

@ Deigo

Ask your tax accountant. They should have all the items you are in question about and let you know how many years of depreciation you can take before replacing it.

Mike Cumbie · Answer

HI @Diego StPhillip

DISCLAIMER: Not a lawyer, or accountant just some rambling dolt on the internet.

I am not aware of a legal/ethical/moral definition of "Reasonable". That definition is argued daily in courtrooms, conference calls, investigative rooms etc. It is not one of those areas with a "hard black and white line" (that I am aware of). Companies sell used office equipment to employees all the time after it has depreciated. If the item has not fully depreciated then don't get rid of it (or sell it to cover the difference). If it has, then it has "depreciated" and has no value (in which case if you sell it you claim the cash as income).

That is actually one of the reasons people sell buildings before they depreciate. You see them all the time, vacant, abandoned want an arm and a leg for them. All of a sudden after sitting there empty for 20 years it's on a fire sale.

Diego StPhillip · Answer

Thanks @Percy Matsunaga!

I definitely wouldn't do this constantly. But I guess I'm trying to figure out how to define "reasonable". For example, to me its reasonable to replace a snow blower after 5 years with a new one. But someone else might say its not reasonable since the snow blower still works just fine.

I'm looking for more legal parameters on what is acceptable and what is not. I definitely don't think I'm abusing the law by taking a refrigerator after 10 years but I'm curious to understand the law here as well.

Percy Matsunaga · Answer

@ Diego Stphillip

Definitely there are going to be appliances that are going to be replaced, so if you decide to take the older one instead of having them discarded I don’t think you can get in trouble with the IRS.

However, if you are constantly buying appliances yearly and claiming that as a deduction on your taxes that could look very odd from a IRS point of view.

Diego StPhillip · Answer

Thanks for all the answers so far. In this case, it is a 12+ year old fridge. It works just fine but I want to be proactive and replace it for my tenants. I figured I would rather keep it than trash it as I could use a spare fridge for my garage.

I'm also interested in the legal boundaries of this question though. For example, I bought my rental property a snow blower 5-6 years ago and will probably replace it in 2-3 years to be proactive. Would I have to purchase that snow blower to use personally or to give to a friend?

John Teachout · Answer

The IRS actually has publications referring to conversions of previously expensed or depreciated items. Typically, if you sell or otherwise dispose of them, any proceeds would need to be rolled back into the accounting. So if you removed a fridge that was 4 years old and used it personally, that may be an issue since that's well within the typical life of a fridge and it would have value on the used market. I doubt this would trigger an audit but any similar items, you could always sell back to yourself.

Theresa Harris · Answer

Assuming you didn't just buy the fridge a year or two ago, I don't see the problem.  Normally if you were replacing a fridge, the old one would be sold, donated or sent to the dump.

Can I take items from rental property that I own?

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