Hello all,
I bought a house for $300k and lived there for 4 years. During the time, I bought about $5k for tools and materials (with receipts) and upgraded the house myself (that would cost $20k if hiring contractor). The home value as on Zillow or if by a professional appraiser is $500k and only $350k on county tax appraisal (land value $50k)
I am moving to a new house so I want to convert the old house to rental property.
I read and found some information regarding: Section 121, yearly depreciation etc.
Can you suggest on:
- Should I sell the house to our LLC, S or C corp now or keep it as personal? If keep it as personal, should I do the sell before 3 years mark to leverage section 121?
- Should I depreciate it with FMV as $500k-$50k or $350k-50k (same tax bracket either ways)
- Can I count the tools and materials I bought as deductible expense?
Thanks much.
