Short Term Rental Furnishings

[birddogtb]

There is a property that was purchased solely for AirBNB, short-term rental usage.  The furnishings were purchased separately subsequent to closing. A design firm assisted with the purchase of the furnishings and decor. The invoice from the designer does not separately identify the cost  of > than 1 year assets. It is necessary to itemize each furnishing/asset on Form 4562 or can you lump them together assuming they all have the same depreciable term?  Thank you for some direction.

[Anonymous_]

If you have one invoice from the designer (who purchased all of the furnishings), there is really no reason you could not use that total (i.e., "lump them together") and depreciate the total over a five-year period (furnishings for residential real estate rentals have a recovery period of five years). 

The foregoing method could have negative implications should you decide to dispose of or otherwise sell one or more of the items (less than all of them) as you would need to make an allocation for the item(s).

[Anonymous_]

Note that you might have been able to use the de minimis safe harbor if the invoice had listed the items individually. This would be applicable for those items that would have been listed where the cost was $2500 or less.

See https://www.irs.gov/businesses/small-businesses-self-employed/tangible-property-final-regulations#Ad...

[Anonymous_]

Further note that if you provide substantial services primarily for your tenant's convenience, you would be reporting this rental on Schedule C as a business.

See https://www.irs.gov/publications/p527#en_US_2022_publink1000234064