1) if I put my townhome that I lived in on the market in April 2019, however, it did not rent until June, which date do I put as when the home was "placed into service"?
The property has been in service since the first day a renter "could" have moved in. Period.
2) turbotax asks me during the deduction process what the rental business purpose is and gives options as "single family home" and "duplex or multi-family home" and other options. For this, would I elect the single family home option for my townhome?
It's okay to use common sense. The property was built, designed for, and intended to house a single family.
3) please see screenshot below directly from turbotax.
a. From your perspective, you did purchase the asset new. If you read the selections, it's the only one that makes the most sense.
b. Yes.
c. This has been an issue of contention in some specific situations. But it's most common when you are converting less than 100% of your primary residence to a rental - such as when you are renting out a bedroom in your house. So I don't think your situation is one of them. But to make absolutely positively certain of that, use the worksheet on page 38 of IRS Publication 946 at https://www.irs.gov/pub/irs-pdf/p946.pdf Pay attention to the note for the asterisk on worksheet line item #7. The table you will need to reference is table A-6 on page 72. The results should agree with (within a few bucks) of what the program results are.
Now I am providing you the below information for reference. There are those areas where the program lacks the clarify that I think it should provide. So my guidance below will provide you that clarity. When setting up a rental property, perfection is not an option in that first year. It's an absolute must. Even the tiniest of mistakes will grow exponentially over time. Then when you catch the error years down the road (usually in the year you sell the property.) the cost of fixing it will be expensive. So I reiterate again - Perfection is not an option - it's an absolute *MUST*.
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.
