Almost forgot. After you finish working through the expenses section, you need to work through the Assets/Depreciation section too. You *MUST* enter the property itself at a minimum, as an asset. Here's how to get the numbers and answers right. For this example, I'm still assuming that 20% of your floor space was exclusive to the renter for 182 days (last 6 months of the year)
- Describe this asset - Select rental real estate property and continue.
- Tell us a little more about the asset - Select Residential rental real estate and continue.
- Describe this asset - for the name, enter anything you want. I like using the street address myself.
Next enter the *TOTAL* *COST* of what you paid for the condo.
Next, you *MUST* enter a cost for the land. The arguement that "I don't own any land" won't fly. The fact is, you do own the land that the structural foundation physically covers. If you are in a multi-story condo structure then you own a percentage of the land immediately and directly beneath the foundation of the structure. You *must* allocate a portion of the amount you entered in the "COST" box, for the land. So if you paid $100,000 for the condo, that's the amount you will enter in the COST box. Then you must allocate a realistic portion of that $100,000 for the land. Lets pick a number out of thin air for this example, and enter $20,000 in the "cost of land" box.
At this point since land is not a depreciable asset, the program will "do the math" and subtract "cost of land" from "cost" and that difference ($80,000 in this example) is what will be depreciated over the next 27.5 years.
Finally on this screen, enter the date you "originally" purchased the property, and not the date you last refinanced the property if you've ever done a refi on it in the past. Then continue.
Now select "I purchased this asset new" and also select *NO* I have not always used this item 100% of the time for business.
Select "I used this item for personal purposes before I started using it in the business".
For "date I started using this item for business" enter the date the room or space was "available for rent".
For percentage of time you used it in this business you will enter 100% ONE HUNDRED PERCENT. Read the screen. The percentage being asked for is *based* *on* *time* starting from the date you entered in the box directly above that. (NOTE: I believe the percentage I told you to enter here, while correct for the question asked, it's wrong for the math the program does. In other words, for *your* *specific* *situation* I think you're being asked the wrong question on this screen. I am in the process of "passing this up the chain" through the forum moderator to a CPA, to determine the accuracy of my suspicions.) Either myself or a forum moderator will get back to you on this in the next few days. )
