Thanks for your input so far on this topic. I have some other questions related to converting a second home to a short term rental property.
Once I have figured out the original basis for the property (original cost + capital improvements since purchase....all before service date), can I use that depreciated cost as a deduction each year?
I already had the mortgage in place for a few years before we changed it to short term rental. Can I now just deduct the cost of the mortgage (principal, interest, taxes)?
What about pre-rental expenses not tied to the actual physical property? I bought a house full of furniture and a bunch of supplies (towels, consumables, kitchenware) without which i would not be able to rent the house. That's not capital expenditure, so is there no way for me to deduct that?
Also. what about expenses related to the "business" of renting house not tied to the actual house....for instance professional advice (real estate, CPA, legal). There's space for those expenses in the Turbo Tax questionnaire, but they are in post-service date section. Does the IRS really expect you to wait until after you start renting a house to incur professional expenses about renting the house? It makes no sense.
