New GA landlord with tax questions

[Silvia B.]

After researching online and in landlording books I am still alittle confused about deductions / depreciations and business vs property owner. Can someone please tell me if I have this info correct?

Bought my first and only rental property in April. I do not have a business license. Did some repairs and the property was placed in service July 1. Unable to find the right tennant until Nov 1. Between July and Nov we took the opportunity to do some more repairs and replacements. I am actively involved in the property as I do the yard maintanence, etc. but am considered an investor rather than a business owner, according to the landlord tax classifications.

If I understand it corectly, and since it is not considered a business:
1. I cannot take the initial "business start up "deduction of $5000.
2. all repairs and supply costs from April to July need to be added to the initial cost basis and depreciated over 27.5yr.
3. all appliances, blinds, lights etc are depreciated from the July 1 "placed in service" date.
4. all supply,repair, maintanence costs after July 1 are deducted this year
Thanks in advance for any input...I'm a newbie at this so please be kind.

[Steve Babiak]

Mitch,

Sure it is a rental from the date of closing, But it is not in service as a rental until later, unless it came with a tenant. How much later on varies, but rehab and repairs until it is in service get capitalized rather than expensed.

Just what constitutes "in service" is also somewhat debateable. When you started advertising it "for rent"; when you started showing it to potential tenants (but they didn't fill out an application); when you received a tenant application (even one you rejected); when you received a certificate of occupancy. All of the preceding can be argued, and the order I have it could be a weakest to strongest position (I think).

I think what you described in your earlier post would have been costs that should have been capitalized IMO.