Sch E Type of property - Commercial or multi-family residence

Rental Property Investor · Helena, MT · Member since 2017 · 282 posts · 117 votes

Happy Friday, Hope others are enjoying a nice night doing taxes as well. I purchased a 6 unit property (quadplex + 2 single family houses) this summer. It is zoned mixed use - residential & commercial. I pay the county tax bill as 1 bill. When filling out Schedule E should I claim it as: 1. 3 different properties - 1 multi-family residence and 2 single family residences 2. 1 property - commercial 3. 1 property - multi-family residence I assume option 3 and that makes it easier to fill out, but I wanted to double check . Thanks, Andrew

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Natalie KolodijBusiness Member
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Tax Strategist| National Tax Educator| Accepting New Clients · Member since 2014 · 3k+ posts · 4k+ votes
6y
Are they all under 1 legal address?
If so I would do 1 schedule E and you'll essentially treat it like 6 units.
I would call it "other" - "Singles and Multi" or something like that
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Michael PlaksPro Member
Tax Accountant / Enrolled Agent · Houston, TX · Member since 2014 · 5k+ posts · 6k+ votes
6y
@Andrew S.
My criteria is - will you ever consider selling a part of this property, as opposed to the whole property? If not, then I'd report it as a single property, as long as all 6 units will be residential, i.e. people sleeping there.
Zoning does not matter for federal taxes. The actual use does, because residential and non-residential properties have different tax rules. So, if you're considering using one or more of the units as non-residential (rent it as a business office, for example), then it may be to your advantage to separate the residential from non-residential. At that point, I'd recommend professional advice.
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Chris MasonPro Member
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Lender · CA · Member since 2015 · 9k+ posts · 10k+ votes
6y
If you care what a Fannie Mae type underwriter will think (ie, you want a 30YF of some sort in the future), put it all on a single line, it's one single property, according to what I think you said.
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Eamonn McElroy
Accountant · Atlanta, GA · Member since 2015 · 1k+ posts · 1k+ votes
6y
It's really just presentational and doesn't matter assuming everything else is done correctly.
The important thing is the depreciation schedule. Break it out by structure on there. You may thank yourself years later.
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Andrew S.
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Rental Property Investor · Helena, MT · Member since 2017 · 282 posts · 117 votes
6y
Thanks, I'll try to break it down individually on the depreciation schedule. I do have a different initial estimated building value on the tax form for the quad and the single families.
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