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Level 1
posted Mar 22, 2024 5:58:25 PM

STUMPED - Have you used this item 100% for this business since you acquired it?

Situation - I have an AirBnB in my full basement. It is rented 350 out of 365 days / year.  When basement not rented it is NOT used for personal use.

The rest of the house is my personal space/personal use 100% of time.

 

In the WAGES AND INCOME section of TT, I am entering my rental property info. 

Under ADD EXPENSE or ASSET I addded the Rental Property at an asset.

 

On the next few screens I added:

date the property in service, that it is a Rental Real Estate Property, and that it is categorized as a Residential Rental Real Estate (not appliances, carpet, furniture or land improvement).  I entered the cost, cost of land, date acquired.

 

Under screen 'tell us more abo.ut this rental' I listed that I purchased it and here is where I get stuck. Is it referring to the whole home here or just the basement?  Since i do not use the BASEMENT airbnb for personal, I'm guessing I say 100% but it is confusing as I don't want to represent that the entire property (multiple floors of living space) is a rental.

 

It asks: Have you used this item 100% for this business since you acquired it?

Options:

Yes, I've always used this item 100% of the time for this business.
No, I have not always used this item 100% of the time for this business. Learn More

 

 

 

 

 

0 2 5564
2 Replies
Expert Alumni
Mar 26, 2024 2:50:18 PM

It depends.  If you have entered only the rental square feet as the home asset (no land is needed since it cannot be depreciated) then you should say yes.  

  • Take the basement square feet / total square feet of the home to arrive rental portion of your home.  
  • Use this percentage against the cost of your home (do not include the land portion of the cost), and the result will be the cost basis to list for your rental basement of your home as an asset.  
    • To arrive at the land cost you can use the tax assessments from your county or city.  Take the land value divided by the total value to arrive at the % of the total cost that belongs to the house.
  • The date acquired is not the date the property was placed in service for rental (generally).  Once you enter the date the property was placed in service for rental, then it is used 100% of the time for business. You can say you have not always used this item 100% of the time for business (if you did not begin renting it when you purchased the home) but it was used 100% of time for business from the day it became available for rent.

I suggest using my steps versus entering the whole house with land and then using days rented during the year. It's easier for you to use the rental percentage for other expenses that affect the entire home as well.  

Level 1
Mar 26, 2024 7:19:14 PM

Thank you, this has reduced my tax return but it makes more sense now.  I followed your directions exactly.