Yes, we can help. Your questions are answered below.
The expenses of $6,000 are ordinary and necessary expenses for your rental so they would be currently deductible as an expense and not an asset.
Initial cost of building less land value is depreciated as Residential Property with a 27.5 year cost recovery period so the depreciation is also carried to the Schedule E as an expense ($15,000 in your example).
Landscaping and appliances are separate assets.
- Landscaping is a 15 year recovery period.
- Appliances are a 5 year recovery and although Section 179 can be used, if you aren't receiving a benefit in 2023, you should depreciate them so that you get a larger amount next year when it could make a difference.
Passive Activity Special Rules for Residential Real Estate:
Active participation is a requirement to be allowed to reduce other income by the loss on your rental property. There is also an income limit that begins to reduce that amount.
Phaseout Rule: The maximum special allowance of $25,000 ($12,500 for married individuals filing separate returns and living apart at all times during the year) is reduced by 50% of the amount of your modified adjusted gross income that’s more than $100,000 ($50,000 if you’re married filing separately). If your modified adjusted gross income is $150,000 or more ($75,000 or more if you’re married filing separately), you generally can’t use the special allowance. This is because the special allowance is reduced to $0 since the modified adjusted gross income is over the $100,000 amount.
If you have any loss that is not allowed based on these rules, it will be carried forward on Form 8582, which is what you will look for in your return.
@jawckey
**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
