Cost Segregation on a Personal to Rental Conversion
The tax publications say when converting a personal home to a rental, the basis is the lesser of the FMV or adjusted basis.
1. Is there any rule saying one couldn't do a cost segregation when converting, to bonus depreciate the carpet and appliances as examples in a house? They are placed in service at the conversion just like when buying a rental, so it doesn't seem any different. A specific case would be putting in brand new carpet the week before listing for rent so the FMV and basis of the carpet are the same.
2. Also, similar to the above, if a rental property is bought, and a week before listing for the first time, brand new carpet is bought, can the carpet be bonus depreciated when placed in service? Improvements are added to the basis if done before in service, but since carpet is 5 year personal property and not an improvement to the 27.5 year property, it seems it can be segregated?