Hello,
I bought a property in 2020, had it for personal use for a month and converted to 100% rental since then. I had a few things I’m unsure about:
1) My 2020 real estate assessment showed building value as 570 and land at 37k. Purchase price was close to assessment, so I took depreciation on 570k in 2020. However, 2021 real estate assessment shows building value reduced to 537k and land value at 80k. Do I need to go and adjust/lower the basis for 2021 and beyond and take lower depreciation, or do I continue taking depreciation on the original 570k?
2) I replaced my AC and furnace unit in 2021, total cost including labor was $6k. I read that I can expense it (and not capitalize) under the safe harbor election for small taxpayers. I’m not sure if by using this election I’m self-declaring my rental property income to be a business? I am on an employment visa in the US and thus need to keep my rental property income as a passive investment to comply.
3) I originally bought and kept the property for personal use (for 1 month). Can I claim any of the original settlement/closing fees on a pro-rated basis since I converted to rental after 1 month? Or am I not allowed to claim at all since I paid those when property was bought and kept under personal use at time of closing?
Thanks for reading!
