Four Plex Schedule E

[Whitney Leighton]

Hi folks,

I purchased a 4-plex in January 2020 with the intention of renting one unit out as an airbnb and the other 3 as regular unfurnished long term rentals. I purchased all the furnishings to get the Airbnb unit set up, but withdrew my Airbnb application when covid hit because I didnt know how things would go. Instead, I ended up renting it out as a long-term unfurnished unit and put all the furnishings in one of the other units and rented it out as a long-term furnished rental. 

In this case, what is the best way to deduct these furnishings? 

Also, should I combine expenses for all 4 units onto one Schedule E, or do I need to create 4 separate Schedule E's for this property? If placed in service dates were different for 2 of the units than from the other 2, then I imagine all 4 would need to be depreciated separately, so I'm thinking 4 separate Schedule E's would be appropriate.  

[Frank Chin]

@Whitney Leighton

I used section 179 deduction for expensing business use equipment, so you might take a look into it. There's some discussions on advantages of section 179 vs bonus depreciation, and differences in recapture. See: Section 179 vs bonus depreciation I have not used section 179 recent years.

From what I see, there's nothing wrong with having 4 schedule E's. I mentioned I had 2 schedule E's for my triplex, after I moved out of my  unit and moving out. But in between, I took over and briefly used one of the rental units for business and scratched my head over how to handle it. Fortunately, someone needed office space, paid me rent, and used space with me so I kept it as a rental unit, thus keeping the schedule E the same. Technically I shouldn't. Then I bought a foreclosure soon after and moved, and so did the guy that needed space. My CPA and I was debating on how to handle the schedule E of the 2 rental units when I took over one, then rented part of the space to someone, keeping part myself. During the discussion, we were thinking things might be easier if we started with 3 schedule E's for the triplex from the beginning. My business was in an S Corp and I thought of paying myself rent.