renting out a suite in a investment/vacation home

[Matt N.]

My partner and I bought a home in South Florida end of 2021 with the intent of doing a small Reno and then airbnb/vrbo and then blocking out the dates we wanted to use the property. We live in Northern Florida and manage our 10 long term rentals and do flips in northern Florida and we decided not to go that route with this south Florida home after we started digging into it. Instead, as with a lot of south Florida wholesale deals- we ended up replacing and having to fix things that were covered up and two years later she was ready to go. Fast forward to the beginning of 2024- we started using Furnished finder and renting out nearly half the house on 30-90 day increments and were fully licensed as a short term rental. We fully furnished the home through FB marketplace and estate sales- nothing high end by any means, but very retro and mid century. My question is, what is the best way to describe this scenario for tax purposes. We keep half the house for our use year round but rent the other half out all year long. 2024 tax year will be the first year we depreciate the asset. The home is in our partnership LLC name as well. We have elected not to count any repairs or costs during 2022-2023 due to to it not being rented at all, not even calling it a second home. Our cost basis has been accumulating with our purchase price and then the 2 years of major repairs during 2022-2023 as well as taxes, utilities and insurance from '22-'23. All receipts can be documented as well over the '22-'23 year. Also, we're not getting anywhere near market rent for the home since its only half the home being rented, however we do feel that we're getting what similar efficiencies are getting in the neighborhood.