topic I bough the condo in 2009 and lived there utill 2016. Then I rented it out. In form 4562 for depreciation, which year I should put? 2009 or 2016? in Investors & landlords

I bough the condo in 2009 and lived there utill 2016. Then I rented it out. In form 4562 for depreciation, which year I should put? 2009 or 2016?

Duanzhuang — Sat, 01 Jun 2019 15:04:22 GMT

I bough the condo in 2009 and lived there utill 2016. Then I rented it out. In form 4562 for depreciation, which year I should put? 2009 or 2016?

Your "in service" date is the date the property was "avai...

Carl — Sat, 01 Jun 2019 15:04:24 GMT

Your "in service" date is the date the property was "available for rent". Generally, that's the day you put the "for rent" sign in the front yard. Deprecation starts on the in-service or available date. Also for your convenience if you need it, I've provided additional information in the answer box below. Sounds like you're a first time landlord. If so, I hope you find it helpful as well as educational and informative.

Thank you for your explanations.

Duanzhuang — Sat, 01 Jun 2019 15:04:26 GMT

Thank you for your explanations.

I have a related questions. The cost and the land values...

Duanzhuang — Sat, 01 Jun 2019 15:04:27 GMT

I have a related questions. The cost and the land values should be the values at the time when the condo was bought or the time when the condo was rented out? Thank you.

The cost is what the depreciation is based on. For cost,...

Carl — Sat, 01 Jun 2019 15:04:28 GMT

The cost is what the depreciation is based on. For cost, you use the *LESSER* of what you paid for it, or the FMV on the date the property was placed in service. While not unheard of, since property values increase over time, it's not very common now-a-days for it to be worth less than what you paid for it. So more than 95% of owners use the price they paid for the property.
Note that if you do not use the price paid for the property, then things get tricky (but not impossible) in the future when you go to report the sale of the property in TurboTax.

Rental Property Dates & Numbers That Matter. Date of Con...

Carl — Sat, 01 Jun 2019 15:04:29 GMT

Rental Property Dates & Numbers That Matter.

Date of Conversion - If this was your primary residence 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 POPERTY 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.