Can I in essence sell my self a refrigerator?

[Kurt Dorsey]

Little background, I am not to rental properties, my wife and my self just purchased our first duplex. Apparently the refrigerator is not working in one of the units and the old landlord never fixed it yet promised them a new one. Since the fridge IS in their lease and they are great tenants (been in same unit since 2004) I want to make good.

I currently have a fridge at my personal residence that it working great but my wife would really like a new one. Can I 'sell' that appliance to my self and put the used fridge in the property and then go ahead and buy a new one for my self? ie: put the old fridge in the duplex and then write it off / depreciate it?

write my self a check from my rental account and then create a receipt for it. I guess I could find a friend to sell the fridge to and then buy it from him for the unit.. but that seems a little shady.

Thanks in advance all, this forum has been a wealth of knowledge thus far

[Bill Gulley]

Kurt, you can contribute other assets to your business at the fair market value of that asset. I'd suggest if it's worth a grand to get a dealer to put a value on it. Another way is to clip out an ad for the same of very similar thing with an ad price. Might look to ebay and copy sales. This establishes a justification for value.

Then you simply add that value to your books as a contribution to capital and it's then part of owner's equity. You can then begin depreciating that asset when it is placed in service.

Your owner's equity and asset accounts include cash on hand. You can pull the same amount of cash out for the value of the asset contributed as an exchange of assets without treating it as income.

You don't treat it as an expense with a receipt as a sale would technically put you personally selling a personal asset and then having to determine any profit personally. Such a sale is also not at arm's length, unless for market value but you making a receipt doesn't establish anything. I know that probably no one does, but if you make money on garage sales, that is other income that can be taxable. And, we aren't talking about a large dollar item here like a vehicle.

If you take an asset out of service, you'll be looking at it's salvage value, market/book value less depreciation and reduce owner's equity accordingly.

That's how I do it! :)