Converted Personal Propert To Rental
I converted my personal residence into rental property last year. I am figuring out my cost basis for the property thanks to Newkid from a post down the list. I have another question. I bought appliances for my house way back in 2002. When I converted the property into a rental, the appliances stayed and the tenants are using them. Can those still be added to my basis in the property and depreciated? Since I had them so long, would the alreay be considered depreciated? Would they go on their own schedule now or get added to the basis of the property?
turbo tax has tools for this.
You might research the topic of depreciation recapture..
Thanks for the reply.
It kinda does. It goes through some of this, but as far as the appiances, can I add the whole cost to the basis even though I used them for 8 years for personal use? Are they fazed out? These are the kinda things I cant find.
Your tax basis for the dwelling structure is the LOWER of the fair market value at the time the property is placed in service, or, your original cost .
Same for the appliances. If you want to depreciate them separately, their depreciation basis is their thrift shop value on the date they are placed in service. Since the total value is likely less than $300 for the full complement of 8 year old kitchen and laundry room appliances, suggest you just wait until they have to be replaced to start a separate depreciation schedule.
By the way, if your property is like most in the country, it has declined in value in the recent past. If the value of the property is less than your purchase price, your tax basis becomes the lower value. This means that when you sell the property, your profit or loss is calculated from this lower basis (adjusted for depreciation and improvements since the property was placed in service).
[ Edited by NewKidInTown3 on Date 02/24/2011 ]
Newkid has the law nailed as usual. But the number you use is up to you... nudge nudge.
Thanks Newkid
If I dont want to depreciate them seperately but just add them to the cost basis, what amount can I use?