We bought a home in 2016. Moved out in July of 2021 and started a very drawn out rehab project. Finally got the place listed as an STR in December of 2022 and have been booked solid ever since.
At what point do I start filing a Schedule E? We've already filed 2021 taxes. I thought I could amend to file a Schedule E and take a loss for 2021, but Turbotax says I can't file the schedule E because the property wasn't placed in service in 2021.
Turbotax never asked for a date of conversion, so where does that come into play?
Unfortunately the CPA we've worked with in the past is booked this month, so I'm trying to figure this out on my own. :)
Thanks for any help you can offer!
Sort of. You're about 90% there.
Step 1. Figure your purchase basis. This is going to be the amount paid for the property plus some of your closing costs.
Step 2. Allocate part of the purchase basis to land. This amount is never depreciated. You'll need to use one of the acceptable methods for allocating land basis.
Step 3. Add all the expenses from 2021 plus everything from 2022 up until you placed it in service. This is going to be all expenses that would otherwise have been deductible - interest, property taxes, insurance, utilities, etc PLUS the amount for remodel. This total amount will be depreciated.
When I prepare returns with this issue, I add the Step 3 amount in as a separate asset called "remodel" or something so that I can accurately trace how I calculated Building Basis, Land Basis and Remodel Basis later, in case it's needed.
should follow income- "placing into service" unwritten rule is rented for a minimum of 2 weeks. should be able to claim going forward 2022 on.
did you show any income for 2021 on the house or did you claim that in 2022?
if the answer is 2022 then you cant go back and claim expenses without that income
TurboTax gets this one correct - nothing to report if it was not placed in service.
Sounds like your in-service date is December 2022, so all of your expenses up through that date must be DEPRECIATED (not deducted).
I know your normal tax pro is busy, but the very best thing for you to do is to put yourself on extension and then get with your current pro (if they are real estate savvy) or shop for a new pro after April 18.
TurboTax gets this one correct - nothing to report if it was not placed in service.
Sounds like your in-service date is December 2022, so all of your expenses up through that date must be DEPRECIATED (not deducted).
I know your normal tax pro is busy, but the very best thing for you to do is to put yourself on extension and then get with your current pro (if they are real estate savvy) or shop for a new pro after April 18.
Can I depreciate expenses that would normally not be capitalized, like utilities, taxes, and insurance?
Sort of. You're about 90% there.
Step 1. Figure your purchase basis. This is going to be the amount paid for the property plus some of your closing costs.
Step 2. Allocate part of the purchase basis to land. This amount is never depreciated. You'll need to use one of the acceptable methods for allocating land basis.
Step 3. Add all the expenses from 2021 plus everything from 2022 up until you placed it in service. This is going to be all expenses that would otherwise have been deductible - interest, property taxes, insurance, utilities, etc PLUS the amount for remodel. This total amount will be depreciated.
When I prepare returns with this issue, I add the Step 3 amount in as a separate asset called "remodel" or something so that I can accurately trace how I calculated Building Basis, Land Basis and Remodel Basis later, in case it's needed.
Wrong. FAFSA will ask for your 2021 tax return, not 2022. Do an extension as my colleagues advised.
Sort of. You're about 90% there.
Step 1. Figure your purchase basis. This is going to be the amount paid for the property plus some of your closing costs.
Step 2. Allocate part of the purchase basis to land. This amount is never depreciated. You'll need to use one of the acceptable methods for allocating land basis.
Step 3. Add all the expenses from 2021 plus everything from 2022 up until you placed it in service. This is going to be all expenses that would otherwise have been deductible - interest, property taxes, insurance, utilities, etc PLUS the amount for remodel. This total amount will be depreciated.
When I prepare returns with this issue, I add the Step 3 amount in as a separate asset called "remodel" or something so that I can accurately trace how I calculated Building Basis, Land Basis and Remodel Basis later, in case it's needed.
Thank you! Yes, I included relevant closing costs and allocated part of the purchase basis to land. :)
Wrong. FAFSA will ask for your 2021 tax return, not 2022. Do an extension as my colleagues advised.
I initially thought that I was amending the 2021 return, but now that I know I'm not, we can file the FAFSA! Thanks!