As an active real estate investor for the past twenty years or so, this question does pique my interest. What start up costs are you speaking of? True incorporation & organizational costs, or capital improvements to the properties themselves – such as rehabilitation costs?
To bounce off a prior response: I would begin depreciation on the day the property became first available to be rented – the first day anyone could occupy it (regardless of being rented or not) which is your effective “Placed in service” date.
From https://www.irs.gov/pub/irs-drop/rp-19-38.pdf, pg 2 of 11, to wit: Revenue Procedure 2019-38, Section 2, paragraph .02 states:
- 1.199A-1(b)(14) provides that rental or licensing of tangible or intangible property (rental activity) that does not rise to the level of a section 162 trade or business is nevertheless treated as a trade or business for purposes of section 199A, if the property is rented or licensed to a trade or business conducted by the individual or a relevant passthrough entity (RPE) which is commonly controlled under § 1.199A-4. Sections 1.199A-5(b) and 1.199A-5(d) define an SSTB and the trade or business of performing services as an employee, respectively.
Thus, my civilian friend, Section 199A classification of residential rental real estate is solely for the Section 199A itself and not to be considered ‘across the category’ treatment.
