All Forum Posts by: Silvia B.

I think that would hold true if I was a business, since those expenses would be part of the business expenses. I think the problem lies in the fact that I am not a business, the house was purchased by me and remained vacant from purchase date to tennant moving in. Although I owned the property, I never lived in this home as it was purchased to be a rental property. I think this is why I must separate the costs from purchase date to date it was placed into service. Originally I had thought that it would all be considered the same but I just read something about it on this forum last night (unfortunatly I can't find that thread today). Thus my confusion. If this was a business (with a business license) it would not be as confusing but I didn't know that at the time. Still looking for guidance and a good CPA.

So Charles, how do you determine if it is a business or not? I only have one single family rental home. Although I am actively involved in all of the upkeep,finance, etc of the rental I do not have a business license. I was of the understanding that I do not need a license for only one property but understand that I will be limited on the deductible items (can't deduct home office, etc). This was told to me by my county license dept. Now they are telling me that if I receive income from it, that I need a business license. That doesn't make sense to me. There seems to be such a fine line between being an active investor and a business owner. Even some CPA's are not giving the same info. How do you know how the IRS will define it? Very confused.

Mitch~ I think I read here somewhere that until the property was placed into service as a rental it is just considered my property and not a rental persay. That is why the costs before July need to be placed into the original cost basis of the property. (?) I've been trying to find that thread but I'll keep trying.

After researching online and in landlording books I am still alittle confused about deductions / depreciations and business vs property owner. Can someone please tell me if I have this info correct?

Bought my first and only rental property in April. I do not have a business license. Did some repairs and the property was placed in service July 1. Unable to find the right tennant until Nov 1. Between July and Nov we took the opportunity to do some more repairs and replacements. I am actively involved in the property as I do the yard maintanence, etc. but am considered an investor rather than a business owner, according to the landlord tax classifications.

If I understand it corectly, and since it is not considered a business:
1. I cannot take the initial "business start up "deduction of $5000.
2. all repairs and supply costs from April to July need to be added to the initial cost basis and depreciated over 27.5yr.
3. all appliances, blinds, lights etc are depreciated from the July 1 "placed in service" date.
4. all supply,repair, maintanence costs after July 1 are deducted this year
Thanks in advance for any input...I'm a newbie at this so please be kind.

Thanks for the tips.

Thanks Mark.
I'm wondering if it would just be easier to forget the "business" start up aspect and just take all repairs as deductions and improvements as depreciations, as long as the house gets rented out the first year?

Thanks Mark. I do have the NOLO book you are talking about and I understand the depreciation vs repair deductions once the house is rented out. But I am still confused.. it says start up costs are for the period before the property is offered for rent. I also understand that appliances and such would be considered a depretiable item. My confusion is: how do I repair the home so that it IS rentable. If the house does not have a sink or working light fixtures, wouldn't these be considered initial repairs as long as they fall below the $5000.00 mark? I can't offer the home without a sink or without working light fixtures. Do I put an add in the newspaper and then go out and install these. That seems backwards to me.

I am still alittle confused about the $5000.00 allowed "start up deductions". Maybe someone here has the answers:
This will be the first home that I will rent out. I just bought it as an REO and am waiting for escrow to close.
I think that paint and basic repairs fall under this section BUT If I want to replace some carpet, replace stove and some light fixtures that are broken these do not seem to fall under the "start up" deductions (or am I wrong).
I have heard that you must advertise that the home is available in order for these things to be deemed "operating expenses". But how do you advertise that the home is available for rent, thus allowing you to take improvement depreciation, if it is not truely move-in ready? I'm confused. I can also afford to have the home vacant but I would like to get the best tax break available also. How do I to work through this? Thanks for any info.

Thank you for your reply. IMO I look at it as a repair/expense also. Just wanted to be sure I understood it correctly.
You stated "you said a new pool" but I did not say that. I said "when I replace the liner". Thanks for the info.

I just bought a REO home and am making my list of things to be repaired and improved. My question is: the home has an inground pool with vinyl liner. This liner is 13 yrs old and is patched beyond repair. The liner above the water line is cracking also. Since the pool is already in ,when I replace this liner is it considered a repair? It does extend the life of the pool but without it the pool is non-functional. I can't find any info on this except that "a swimming pool is an improvement" but I'm not installing a new pool.Thanks