All Forum Posts by: Samuel Kowalsky

The property is in a foreign country (EU member) that does not seem to offer the kind of cost segregation studies that are common in the US. The owner will be providing a list of the items that will be included with the property and their costs, which will provide us with a deduction on the legal fees.

Logically, I would think that, since the current owner will be separating out the cost of the furniture from the apartment, we can perhaps depreciate it according to the normal ADS schedule for furniture, as it seems like it would be equivalent to purchasing used furniture for a property. Though I admit that I may be missing a nuance here . . . 

Hey all !

So I am getting ready to close on a property that I will be purchasing furnished (washing machine, fridge, couch, etc.). I am curious as to how to go about depreciating these items, since they are not exactly brand new -- not old and worn out, by any means, but just not new. I will be getting these items noted in the sale contract, but I am wondering what sort of depreciation schedule to follow (by the bye, this is a property located outside of the US, so will be depreciated using the ADS) : should they be depreciated over the full schedule prescribed in IRS publication 527 (9 or 12 years for most things, I think), or do they qualify for a different kind of depreciation since they have already lived a little.

Thanks for any and all insight !

Thanks everyone for the insight.

@Ryan Elblein I thought about treating it as a vacation rental, and that might be the way to go, since then (as far as I understand it from Publication 527) vacant days are not taken into account at all. However, what I fail to understand then is how the depreciation is accounted -- perhaps I am reading the term 'depreciation' too literally, but does one calculate the depreciation on a vacation home with the same percentage with which one divides expenses ? I.e., if I rent for 185 days and use it for personal use for 10 days, 185/195 would be the rental expenses multiplier, but does that also factor into depreciation ? Or would depreciation be taken for the whole year ?

Thanks very much for your response !

Thanks for the responses. We are living in it temporarily while we make improvements to it (it's in another country where home improvements and repairs can take a really long time), we moved in at the very end of 2019, and plan to vacate to rent it out again within a few months.

So since we are currently living here, would the vacant period preceding our occupation also count as personal use ? We were not using it ourselves, but we were not actively seeking renters, as we knew that we had some work to do on it and did not want to have renters occupying the place while the work was being done. Maybe this case is particular enough to warrant a CPA . . . but I figured I would crowdsource a little first.

As I work through some of the IRS worksheets, I am wondering whether it is normal that there is a difference in the fraction of depreciation one takes on a rental property that was only rented for part of the year, and for deductible expenses incurred during that same year, if the property was idle for a period of time.

For example, if I rented out an apartment for the first eight months, then the apartment was vacant for the remainder of the year (needed some work that I did not have time for), would I be able to claim 100% of the depreciation, but only 2/3 of the deductible expenses for that year ?

Thanks in advance for your help ! 

@Ashish Acharya Thank you for the response ! I did not try to rent it from July until the end of 2019, as I did not want to have a tenant sign a full year lease and not be able to do the necessary work on it and use it in 2020 for personal use. But would that vacant time count as 'idle' and therefore be depreciable ?

@Nicholas Aiola This thread is amazing, and thanks so much for all the great information !

When a property is divided in a given tax year between personal and rental use, do ALL deductions and depreciations incurred during that tax year get multiplied by the fraction of days for which the property was in service as a rental ? That is, if it is service for 6 months, do all expenses (including depreciation) get multiplied by 0.5 when they are reported ?

Thanks in advance for your time.

I have a rental property that I purchased in 2018 and rented it out until July 2019, when the tenants moved out, and the apartment remained vacant for the remainder of 2019. At the beginning of 2020, I began using the property as a home/dwelling -- the property is in a foreign country and, since I did not have any work constraints, I wanted to do some work on it (former tenants and management company did not take good care of it) while visiting with some family in the area. I intend to start renting it out again sometime this summer.

I claimed depreciation for 2018 (amended return) and will claim depreciation when filing my 2019 taxes. However, I am confused about whether I will continue to claim depreciation for 2020--I imagine that, since it will be used for the production of income, I will depreciate it, multiplying the full annual appreciation amount by the fraction of time that it was actually in service (e.g., if I place it in service for half the year, I would take half of the 'normal' depreciation). That seems almost too simple -- I am not sure that depreciation can be used in such an on-again/off-again manner, but I imagine that I still have to claim depreciation while it is in service.

Thanks again, and I apologize if anything isn't clear.

Thanks for the response, Michael.

It is an apartment in the south of France, in a 7-floor building composed of several "résidences" (basically, its bloc-style apartments, as is typical in most French cities). I believe there are some 129 apartments in the whole property (what they would call a "copropriété"). The surface of the apartment is mentioned in the title, but nothing about land.

I'm going to bite the bullet and try to talk to a tax professional about this ; I'm hoping that I can learn how to report the depreciation and then just repeat the process each year.

Thanks for the great responses !

Yonah -- thanks for the congrats ! I looked at the link you provided, and I didn't see that all foreign properties are subject to the ADS . . . what I saw was 'Any property imported from a foreign country for which an Executive Order is in effect because the country maintains trade restrictions or engages in other discriminatory acts.' There is also a section that describes foreign income (looks like I'll have a good amount of reading ahead of me), but still nothing requiring the ADS. Can you cite where that is stated ?

Thanks again !