Hey everyone! I am about to make an offer on a house full furnished. I have heard it would be advantageous to have written into the contract a price for the furniture. Will this help when doing bonus depreciation? Thanks!
Not true. Better not to have furniture in the PSA from a depreciation stand point. Some people like to do this on large properties to help lower property tax assessment by allocating some of the price to personal property.
@Eric Jones I agree with Yonah. It's also important to note that if you're taking out a mortgage on this property, lenders won't take into account the value of the furniture when they are issuing the loan. Even if an addendum is included into the contract stating that the furniture is added at no extra value, you'll be required to come up with the difference if the house appraises lower than purchase price. For example, let's say the price of a house is $450,000 but you want them to throw in the furniture so they counter at $460,000. If the appraiser only values the house at $450,000, you'll need to come up with the $10,000 difference. Including furniture in the sale of a home can complicate the sale and I typically suggest doing a separate bill of sale.