Started an LLC this year for rental property management. No income yet but looking to purchase a trailer for transporting items. Can I write off the purchase ($10,000)?

[tagteam]

I have to assume you started a property management firm whereby you are managing rental properties for other property owners (e.g., a property management business).

In that event, you can look at using Section 179 to deduct the cost of the trailer if you wind up meeting the business income requirement.

See https://www.irs.gov/publications/p946#idm140334975111520

Otherwise, you can look at using the Special Depreciation Allowance (SDA - aka bonus depreciation) to expense the trailer.

See https://www.irs.gov/publications/p946#idm140334973797184

[teambissonette]

Thank you tagteam. Really appreciate it. One follow up. With no income yet…(have not transferred houses to LLC from personal ownership) I assume it is better to buy them as an individual vs the LLC purchasing them. I can use the 179 deduction on personal income taxes under business expenses?

[tagteam]

There is a reason I asked if you were planning to manage rental properties for other owners (i.e., starting a property management business) rather than owning them yourself (or through an LLC, of which you are the sole member).

You would not qualify for Section 179 treatment nor bonus depreciation unless you were actually in business. However, it now appears as if you will simply own and hold properties for rental purposes. In that instance, your rental income will be passive and the trailer will not qualify for Section 179 treatment nor bonus depreciation; you will have to use the standard GDS schedule for depreciation.

[Opus 17]

The general concept is that if you buy items that have an expected useful life of more than 1 year, they are assets, and you deduct the cost over the expected life of the asset (which might be 5, 7, 10 or more years, depending on the type of asset.)   Individual items that cost less than $2500 can be taken as an expense (basically, to save paperwork, so business owners don't have to track every small item).  And there are a couple of special ways to deduct the cost of the asset all at once, or faster than the regular schedule, but you don't qualify based on the type of business you will be in.  (And even if you did, there are tax consequences if you stop using the asset for business before the end of the original schedule.)

So yes, you can "write off" the cost of a trailer, but as an asset over time, not all at once.  

[tagteam]

So yes, you can "write off" the cost of a trailer, but as an asset over time, not all at once.  

The above-quoted statement is true except in the event that the rental activity of the associated properties rises to the level of a trade or business (unlikely, but possible).

[Opus 17]

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@tagteam wrote:

So yes, you can "write off" the cost of a trailer, but as an asset over time, not all at once.  

The above-quoted statement is true except in the event that the rental activity of the associated properties rises to the level of a trade or business (unlikely, but possible).

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Yes, you already covered the ways in which a business can "write off" an asset more quickly, if it qualifies.

[tagteam]

My point was you are assuming @teambissonette's rental activity does not rise to the level of a trade or business (which we have no way of knowing at this point). 

[otherwise, your previous post did nothing more than essentially cover what I stated in my previous posts]

[teambissonette]

Thanks you tagteam and Opus. Really appreciate your insight and time getting this information to us.