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If all the rental units were either rented or available for rent during 2019, then answer Yes to the question.
If all the rental units were either rented or available for rent during 2019, then answer Yes to the question.
The "days rented" count starts on the first day a renter "could" have moved in. Doesn't matter if it sat empty for 6 months either. For example, if you purhcased the property on 1 Apr 2019 and on that same date a renter "could" have moved in *AND* you advertised it for rent on that same date, lets say you didn't get your first renter moved in until 1 July, three months later. So long as you did not live in the property for *ANY* personal use for one single day, your day count starts on 1 Apr 2019.
If you are treating this as a multi-unit structure listed under a single column on the SCH E, then you "think" in terms of a single unit. So if you only got one unit rented out, and did not use any other unit for personal pleasure, then the *ENTIRE* structure was 100% business use and ZERO PERCENT personal use.
You have a choice to enter this as a multi-unit rental, or to enter each unti as a physically separate property. WHich method you chose depends on which would best fit your specific needs now, and in the future. For example, if there is a possibility that you could live in one of the units, or that you could sell one of the units later down the road, then it would make more sense to treat each unit as a physically separate rental property.
Oh one more thing using my previous expamle. If you purhcasee the property on Apr 1 for the purpose of renting it out to produce business income and you did not live in the property for any personal use for the entire tax year, then ***YES*** the property was rented all year. The program will "know" the correct depreciation to take for that first year, based on your purchased/in-service date. Here's some additional clarification you may find helpful, which the program does not provide.
Rental Property Dates & Numbers That Matter.
Date of Conversion - If this was your primary residence or 2nd home before, then this date is the day AFTER you moved out.
In Service Date - This is the date a renter "could" have moved in. Usually, this date is the day you put the FOR RENT sign in the front yard.
Number of days Rented - the day count for this starts from the first day a renter "could" have moved in. That should be your "in service" date if you were asked for that. Vacant periods between renters count also PROVIDED you did not live in the house for one single day during said period of vacancy.
Days of Personal Use - This number will be a big fat ZERO. Read the screen. It's asking for the number of days you lived in the property AFTER you converted it to a rental. I seriously doubt (though it is possible) that you lived in the house (or space, if renting a part of your home) as your primary residence or 2nd home, after you converted it to a rental.
Business Use Percentage. 100%. I'll put that in words so there's no doubt I didn't make a typo here. One Hundred Percent. After you converted this property or space to rental use, it was one hundred percent business use. What you used it for prior to the date of conversion doesn't count.
RENTAL PROPERTY ASSETS, MAINTENANCE/CLEANING/REPAIRS DEFINED
Property Improvement.
Property improvements are expenses you incur that add value to the property. Expenses for this are entered in the Assets/Depreciation section and depreciated over time. Property improvements can be done at any time after your initial purchase of the property. It does not matter if it was your residence or a rental at the time of the improvement. It still adds value to the property.
To be classified as a property improvement, two criteria must be met:
1) The improvement must become "a material part of" the property. For example, remodeling the bathroom, new cabinets or appliances in the kitchen. New carpet. Replacing that old Central Air unit.
2) The improvement must add "real" value to the property. In other words, when the property is appraised by a qualified, certified, licensed property appraiser, he will appraise it at a higher value, than he would have without the improvements.
Cleaning & Maintenance
Those expenses incurred to maintain the rental property and it's assets in the useable condition the property and/or asset was designed and intended for. Routine cleaning and maintenance expenses are only deductible if they are incurred while the property is classified as a rental. Cleaning and maintenance expenses incurred in the process of preparing the property for rent are not deductible.
Repair
Those expenses incurred to return the property or it's assets to the same useable condition they were in, prior to the event that caused the property or asset to be unusable. Repair expenses incurred are only deductible if incurred while the property is classified as a rental. Repair costs incurred in the process of preparing the property for rent are not deductible.
Additional clarifications: Painting a room does not qualify as a property improvement. While the paint does become “a material part of” the property, from the perspective of a property appraiser, it doesn’t add “real value” to the property.
However, when you do something like convert the garage into a 3rd bedroom for example, making a 2 bedroom house into a 3 bedroom house adds “real value”. Of course, when you convert the garage to a bedroom, you’re going to paint it. But you will include the cost of painting as a part of the property improvement – not an expense separate from it.
Thanks for the answer.
Thanks for the answer, I really appreciate all the details.
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