Combined residential and vacation rental property

[rd23]

In 2019 I purchased some property (cash - no mortgage).  The parcel has two buildings on it - there's a large house that my family plans to use some, and rent out as a vacation rental for most of the year.  There is also a small in-law unit that has a long-term tenant renting it (and am using a management company to manage it).  In 2019 I have been preparing the main house for renting, and have incurred several expenses including:

 - Replacing carpet and installing new vinyl flooring

 - Homeowner's insurance (combined policy for both buildings)

 - Property taxes (combined policy for both buildings)

 - Some new appliances and furniture

 - Utilities (some are provided to the in-law tenant, some the tenant pays separately)

 - Plumbing & furnace repairs

I have also been receiving some rental income from the tenant in the in-law unit.

I have never owned income property before.  I generally prefer to do my own taxes with tax software to ensure that I understand my taxes, and hope to learn the details of taxes and deductions for my new property as well.  I am keeping careful records and receipts of all expenses and income. However, I'm somewhat confused on how to treat this new property.  If anyone can give me some pointers to get started, I would really appreciate it.

Here are some of my questions:

 - Should I treat this property as a single investment, or two separate ones for the vacation rental and the residential unit?

 - If I treat them separately, how do I split expenses such as insurance and property taxes that are shared for the whole property?

 - If I treat it as a single property, can I deduct all of these expenses against the rental income - in which case it's a significant loss for 2019?

 - What's the best way to learn more about my situation?  These forums?  Pay a tax pro to sit with me and walk me through a return?  Something else?

 - Any other general advice for a newcomer?

[ThomasM125]

I would suggest you keep the receipts for the two houses separate. That way, you won't need to prorate expenses for the guest house between personal and rental use. So, it will be easier to just have to do that for the main house that you will be using during part of the year. So when you do the tax return, you will complete two schedule E's for the rentals.

You can split expenses for the two houses based on the square footage of the two properties. Add the square footage of the properties together, then divide the total by each unit to get the percentage to apply to the common expenses like mortgage interest, property tax, insurance, etc...

If the property was not available for rent in 2019, you should not deduct the expenses associated with it, especially since you will be using it for personal purposes in addition to renting it. You can set the furniture, fixtures and improvements up for depreciation next year when you start renting the property.

It may be best to learn things on your own so you will understand them better, as you mentioned. Forums like this are a good place to start!