Basis of Vacation Home/Rental Property

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Subject Author Date Basis of Vacation Home/Rental Property Maria M. 10-12-2009  Re: Basis of Vacation Home/Rental Property Arthur Kamlet 10-12-2009  Re: Basis of Vacation Home/Rental Property Mark Rigotti 10-13-2009  Re: Basis of Vacation Home/Rental Property D. Stussy 10-13-2009  Re: Basis of Vacation Home/Rental Property removeps-groups@yahoo.com 10-13-2009  Re: Basis of Vacation Home/Rental Property D. Stussy 10-14-2009  Re: Basis of Vacation Home/Rental Property Mark Bole 10-13-2009  Re: Basis of Vacation Home/Rental Property HLunsford 10-13-2009  Re: Basis of Vacation Home/Rental Property removeps-groups@yahoo.com 10-13-2009  Re: Basis of Vacation Home/Rental Property Arthur Kamlet 10-14-2009
Posted by Maria M. on October 12, 2009, 11:34 pm Please log in for more thread options I have purchased a vacation home in Delaware and I live in Maryland. I will use it more than 14 days and will rent it out more than 14 days. Two questions: 1) Can I breakout the asset purchase between the building itself and the furniture and fixtures and then depreciate each piece of furniture at a different rate than the building? What would be the useful life of USED furniture? I figured this would allow me to depreciate some of the costs faster than using a 27.5 life. Is this worth the trouble? I have about $75k in furniture. 2) Do I need to file a tax return in Delaware even if I will have a loss every year? Thanks. -- << ------------------------------------------------------- >> << The foregoing was not intended or written to be used, >> << nor can it used, for the purpose of avoiding penalties >> << that may be imposed upon the taxpayer. >> << >> << The Charter and the Guidelines for submitting posts >> << to this newsgroup as well as our anti-spamming policy >> << are at www.asktax.org. >> << Copyright (2007) - All rights reserved. >> << ------------------------------------------------------- >> Posted by Arthur Kamlet on October 12, 2009, 11:50 pm Please log in for more thread options >I have purchased a vacation home in Delaware and I live in Maryland. >I will use it more than 14 days and will rent it out more than 14 >days. Two questions: > >1) Can I breakout the asset purchase between the building itself and >the furniture and fixtures and then depreciate each piece of furniture >at a different rate than the building? What would be the useful life >of USED furniture? I figured this would allow me to depreciate some >of the costs faster than using a 27.5 life. Is this worth the >trouble? I have about $75k in furniture. First allocate cost between building and land, and then between structure and furniture and appliances. And justify this allocation. Even if it's used furniture the basis for depreciation is lower of cost or FMV on date placed into rental service. Typically use 7 year depreciation period, HY 200DB for the furniture. Although if the furniture qualifies for MQ, that's what you go with. If you have any questions about this, I strongly recommend you seek local professional tax assistance at least the year you place the property into rental service and the year you dispose of it. >2) Do I need to file a tax return in Delaware even if I will have a >loss every year? I do not get much involved in Delaware taxes, but most states will want you to report rental activities even if at a loss. -- ArtKamlet at a o l dot c o m Columbus OH K2PZH -- << ------------------------------------------------------- >> << The foregoing was not intended or written to be used, >> << nor can it used, for the purpose of avoiding penalties >> << that may be imposed upon the taxpayer. >> << >> << The Charter and the Guidelines for submitting posts >> << to this newsgroup as well as our anti-spamming policy >> << are at www.asktax.org. >> << Copyright (2007) - All rights reserved. >> << ------------------------------------------------------- >> Posted by Mark Rigotti on October 13, 2009, 10:20 am Please log in for more thread options > In article >>I have purchased a vacation home in Delaware and I live in Maryland. >>I will use it more than 14 days and will rent it out more than 14 >>days. Two questions: >> >>1) Can I breakout the asset purchase between the building itself and >>the furniture and fixtures and then depreciate each piece of furniture >>at a different rate than the building? What would be the useful life >>of USED furniture? I figured this would allow me to depreciate some >>of the costs faster than using a 27.5 life. Is this worth the >>trouble? I have about $75k in furniture. > > > First allocate cost between building and land, and then between > structure and furniture and appliances. > > And justify this allocation. Even if it's used furniture the > basis for depreciation is lower of cost or FMV on date placed > into rental service. > > Typically use 7 year depreciation period, HY 200DB for the furniture. > > Although if the furniture qualifies for MQ, that's what you go with. > > > If you have any questions about this, I strongly recommend you > seek local professional tax assistance at least the year you place > the property into rental service and the year you dispose of it. > > >>2) Do I need to file a tax return in Delaware even if I will have a >>loss every year? > > I do not get much involved in Delaware taxes, but most states will > want you to report rental activities even if at a loss. > > -- > > ArtKamlet at a o l dot c o m Columbus OH K2PZH Most states will also disallow loss carryforwards for returns not filed and on the ultimate disposition this will generally result in a very large gain. Basis is still the federal basis (generally) and you can not use the loss carryforwards to offset it. Regards, Mark Rigotti -- << ------------------------------------------------------- >> << The foregoing was not intended or written to be used, >> << nor can it used, for the purpose of avoiding penalties >> << that may be imposed upon the taxpayer. >> << >> << The Charter and the Guidelines for submitting posts >> << to this newsgroup as well as our anti-spamming policy >> << are at www.asktax.org. >> << Copyright (2007) - All rights reserved. >> << ------------------------------------------------------- >> Posted by D. Stussy on October 13, 2009, 4:48 pm Please log in for more thread options > > In article > >>I have purchased a vacation home in Delaware and I live in Maryland. > >>I will use it more than 14 days and will rent it out more than 14 > >>days. Two questions: > >> > >>1) Can I breakout the asset purchase between the building itself and > >>the furniture and fixtures and then depreciate each piece of furniture > >>at a different rate than the building? What would be the useful life > >>of USED furniture? I figured this would allow me to depreciate some > >>of the costs faster than using a 27.5 life. Is this worth the > >>trouble? I have about $75k in furniture. > > > > > > First allocate cost between building and land, and then between > > structure and furniture and appliances. > > > > And justify this allocation. Even if it's used furniture the > > basis for depreciation is lower of cost or FMV on date placed > > into rental service. > > > > Typically use 7 year depreciation period, HY 200DB for the furniture. > > > > Although if the furniture qualifies for MQ, that's what you go with. > > > > > > If you have any questions about this, I strongly recommend you > > seek local professional tax assistance at least the year you place > > the property into rental service and the year you dispose of it. > > > > > >>2) Do I need to file a tax return in Delaware even if I will have a > >>loss every year? > > > > I do not get much involved in Delaware taxes, but most states will > > want you to report rental activities even if at a loss. > > > > -- > > > > ArtKamlet at a o l dot c o m Columbus OH K2PZH > > Most states will also disallow loss carryforwards for returns not filed and > on the ultimate disposition this will generally result in a very large gain. > Basis is still the federal basis (generally) and you can not use the loss > carryforwards to offset it. "...you cannot use the loss carryforwards to offset it"???? A sale which is a total disposition of an interest in a passive activity means that any suspended loss IS deductible and can offset the gain on sale. If your context was solely that of required, non-filed returns and therefore presumed no accumulated passive loss (for state income tax purposes), OK, but then I don't like how you said it. -- << ------------------------------------------------------- >> << The foregoing was not intended or written to be used, >> << nor can it used, for the purpose of avoiding penalties >> << that may be imposed upon the taxpayer. >> << >> << The Charter and the Guidelines for submitting posts >> << to this newsgroup as well as our anti-spamming policy >> << are at www.asktax.org. >> << Copyright (2007) - All rights reserved. >> << ------------------------------------------------------- >> Posted by removeps-groups@yahoo.com on October 13, 2009, 11:29 pm Please log in for more thread options wrote: > A sale which is a total disposition of an interest in a passive activity > means that any suspended loss IS deductible and can offset the gain on > sale. What if the gain on the sale of the property minus the accumulated/ disallowed depreciation is a negative number? Is the loss you can claim on Schedule 1040 zero, and the remainder is carried over until you begin a new activity like this one? Or can you actually take the negative loss? For example, buy a house at 100k. Depreciate 50k of it, and have accumulated depreciation of 50k. Sell house for 90k. Gain = -10k Depreciation to recapture = 50k Therefore Gain = +40k Disallowed depreciation = 50k Net gain = -10k Do you get to claim the full 10k loss, or is the loss zero and the 10k gets carried over until you get a new rental? -- << ------------------------------------------------------- >> << The foregoing was not intended or written to be used, >> << nor can it used, for the purpose of avoiding penalties >> << that may be imposed upon the taxpayer. >> << >> << The Charter and the Guidelines for submitting posts >> << to this newsgroup as well as our anti-spamming policy >> << are at www.asktax.org. >> << Copyright (2007) - All rights reserved. >> << ------------------------------------------------------- >> Similar Threads Posted Question about land and property basis for a rental property January 18, 2007, 4:01 am Basis For Like-Kind Exchange Property March 10, 2007, 2:11 am Basis of Property Purchased For $1 From Parents March 2, 2008, 12:20 am Real property basis when subdivided September 20, 2008, 12:36 pm Curious: are legal costs added to property basis? 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