2 properties on the lot. One house I live, one house is rented

[BB133]

I live on a lot with two houses, one parcel. We get one single tax statement, so the property taxes covers both houses. The houses are numbered 10213 (the house I live in) and 10217 (the rented smaller house), They are not attached to each other. The main house (10213) is 1680 square foot and the rented house (10217) is 690 SF, which is about 41% of the total property.  Utilities and all other expenses are separate, except property taxes. In the rental property section do I list the 10217 as a rental call it a Duplex/Multi-Family? And how do I show the property taxes? Help is appreciated.

[Opus 17]

If you are new:

One of the things you need to do is list the house as an asset for depreciation. The cost basis for the house is the fair market value, or your cost basis, whichever is lower at the time you started renting the house out.  Land is not depreciated, so you only consider the cost or value of 10217, not the shared land it is on.  If you bought this as one property, you need to allocate the cost in some reasonable way, between the land, the 10217 house, and the 10213 house.  Start by taking your total cost, subtracting the value of the land, then dividing the cost of the houses.  Square footage might be one reasonable way to divide the cost.  There might be other reasonable ways, such as if one house has much newer improvements and upgrades, that might tilt the scales one way or the other.  You might get the value of the land from the tax assessor, or you might get a market opinion from a real estate professional as to the allocation of value between the land, and the 2 houses.  Keep your records or notes of how you allocated the cost, as long as you own the property, in case of audit.

Then, once you have determined an allocation method for the 10217 house as an asset, you would use the same allocation method to divide the property tax bill between your personal property and the rental property.  

[Opus 17]

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@tagteam wrote:

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@Opus 17 wrote:

....You might get the value of the land from the tax assessor....

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I'm not sure why the value of the land is even relevant since the property has one PIN (property tax ID number) and only the structure is depreciable.

The basis of the structure needs to be determined and then entered as a rental asset.

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Right.  But the value of the land might be useful in determining the cost basis of the house.

I'm assuming the property was bought and placed in service right away, or the property has increased in value since purchase, so the cost basis will be the purchase cost rather than the FMV.

For example, suppose the entire property cost $250,000.  If the land was worth $25,000 at the time, then the cost basis of the structures combined is $225,000.  That is the amount that must be allocated, perhaps on a square foot basis or something else.  In other words, if the rental house is 40% of the property as mentioned, the cost basis of the house would be 40% x $225,000 = $90,000, rather than 40% x $250,000 = $100,000.

I hope my thinking makes sense.