I’m sorry but I’ve never used a discussion forum of any kind before, so I don’t know if I’m starting a new thread or not or if I should.
Anyways, here is my question: I’m looking at buying a 4 plex and plan to live in one unit. Would I still depreciate the whole building cost, if not how would I determine how much and what about the rest of my deductions. Part 2: When I move out and rent my unit, would I just start a new depreciation schedule, just for that one unit??
I'm sorry but I've never used a discussion forum of any kind before, so I don't know if I'm starting a new thread or not or if I should.
Yes, it would have been better to start a new thread, since your question is a new question, not a continuation of the discussion resulting from the original post. Starting a new thread will expose your question to the widest audience, since frequent board visitors who have previously read the original post and the ensuing discussion may not come back to this topic again.
I'm looking at buying a 4 plex and plan to live in one unit. Would I still depreciate the whole building cost, if not how would I determine how much and what about the rest of my deductions.
I assume that you already know that only the structure can be depreciated. The cost of the land must be subtracted from the purchase price to determine the cost of the building structure.
Let’s assume that all units are approximately equal in size and value. Since you will be living in one unit, and using only three units as rentals, you can only take a depreciate expense for three-fourths of the building structure. So, only 75% of the building structure cost will be your basis for depreciation.
What about the “rest” of your deductions? Not sure what you mean, so you need to clarify your question. Generally, the direct costs you incurred for maintaining your rental units are allowed expenses. The costs for maintaining your residence unit are non-deductible personal expenses.
Part 2: When I move out and rent my unit, would I just start a new depreciation schedule, just for that one unit??
Yes, definitely.
im getting ready to do my taxes and i have 1 SFH and one that i spent half the year rehabing and trying to sell and finally renting it out as well as spending countless hours looking at/for other properties. My question is I had a total income of $3,300 off my rental house(only rented it for 6 months). What do i get to deduct as business expenses? I assume i can deduct/depreciate my pickup, gas, mileage, insurance and taxes. Also depreciate tools, the homes, deduct my interest on the mortgages, expenses i paid for repairs, taxes on the house and insurance. With what i have figured, im going to show a loss of about $10,000 if i deduct everything. Since i am showing this kind of a loss, can i get money back out of the taxes i paid in from my regular fulltime job? or is my fulltime job and real estate business seperate? please advise. Thanks Andy.
note: I use my pickup to travel about 1 mile to and from my regular job everyday and the rest of the use is mainly for driving to my properties and looking for other properties. So roughly 75% it used for business.
Andy,
A lot of the answers are going to be determined by how you buy and hold properties (any entities – LLC, etc)…
You need to look at Form 1040, Schedule E and it’s instructions. It tells all of the allowable deductions.
You also have to depreciate carpet, appliances, furnaces, A/C units, roofs, etc.
I’m not a tax expert but you will probably have to take the mileage deductionn (it’s pretty good, like $0.48 per mile) rather than your whole vehicle…a tax advisor/CPAcan tell you more.
If you make less than the IRS threshold, you can deduct your “passive losses” (from real estate) from your active income (from your J.O.B.)
Keith