All Forum Posts by: AJ D.

My Rental PIS date will be August 1, 2024. I currently just have a 2-door honda that I will use for business travel/managing the rental. Ideally, I'd like to buy a more practical car for managing my rental (something with more storag space) later this year. 

Question - Can I use standard mileage for my current honda, and then once I buy a business vehicle use actual expenses? Or, do I have to stick with 1 (standard or actual) for the whole year, regardless of a new car purchase?

Hi - Getting very close to completing my new build construction and had 2 questions around De Minimus Safe Harbor rules/accounting

1)  For appliances that I purchase BEFORE official "available to rent" date. Do these have to be capitalized? For example, a dryer that costs $1500, can I use De Minimus Safe Harbor for that, or does it still need to be capitalized since I purchased it before officially putting cabin up for rent?

2) Can De Minimus Safe Harbor result in a  net operating loss? 

Thanks everyone! And yes, I do plan to do a cost seg and I’m hoping since I have the actual costs that I won’t need to pay a 3rd party to do a cost seg study for me.  

How would you account for appreciation/upgrades to a new construction build from a Cost basis perspective?

Ex) Original build was estimated to be $500k, however during the build upgrades were selected such as windows, larger patio, upgraded floors, etc.

Option A - Would you have the property reassessed after completion and use the new assessed value for cost basis? 

Option B - Use the original amount of $500k, and add the dollar value of the upgrades (windows, floors, etc.) 

Appreciate any help and if there is a 3rd option that would be great to know! Ideally, I want to make it as efficient as possible while still being compliant from an accounting/IRS perspective. 

My orignal new construction build was for around $400k, with some upgrades it will end up closer to $430k. When it comes time to calculate depreciation, will I use the $400k or $430k amount (land is already not included). I am trying to understand which number would be used for depreciation purposes.

In terms of depreciation - what happens if your new constrution build ends up being more than the original loan amount?

For example, I initially had my new construction build assessed at $400k, however there were some upgrades along the way (windows, doors, patio, etc.) that will now end up closer to $430k. 

Is it ok for me to use the $430k number for depreciation purposes, or am I limited to the $400k amount since that was the original appraisal estimate for the intitial construction loan?

 Thanks for the insight, much appreciated!

 thank you!

I understand the IRS views the first day of your rental to be when it's available for use (not when you purchase) but how does this impact business/tax deductions?
For example - I have a rental property that is put in-use on July 1st, but I bought furniture throughout the months of May and June. Is this furniture able to fall under the de minimus safe harbor even though it was purchased before the officail "in-use" date? If not, how do rental property owners tend to deduct furniture and other appliances that are purchased before the formal in-use date?

Thanks Joseph. And one last question/confirmation.
My understanding is a short term rental life span is considered 39 years (rather than 27.5), so does that mean I can consider it a "Vacation/short-term rental" in terms of property type, but still depreciate it over 39 years? 
Or would classifying it as #3, mean it too has to be depreciated over 27.5 years?