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Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 13323
Experience:  15years with H & R Block. Divisional leader, Instructor
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I have questions about preparing my 2015 tax return with

Customer Question

I have questions about preparing my 2015 tax return with TurboTax, as well as planning for my 2016 return.
In 2015 I began holding my home residence out for rent, while I lived in it, as a furnished short-term vacation rental home as well as a filming location house. As it turns out my house never rented. I had no revenue in 2015. 2016 will be much different. In 2016 I began leasing my house for at least a year, but mainly as an unfurnished home.
I had a lot of start-up repairs in 2015 such as weather stripping gaps to keep bugs out, replacing old furnace grills, repainting, new molding, etc. Can I write off these expenses?
I had other expenses in 2015 including furniture such as beds and bedding that I would later sell at a loss in 2016 because I have no use for these items. The furniture was used for pictures to sell the home but was never actually used by any renter. Only a few items are being used by my current tenant.
My question is can I write off this sold furniture, and if so should I just list it on my 2015 return or can I wait until 2016 to mention it. In TurboTax would this sold furniture fall under “other expenses”?
Then I have some furniture such as couches that were purchased in 2015 for the rental home, but in 2016 it was converted to personal use. Again this furniture was used for pictures to sell the home but was never actually used by any renter. Can I write off any depreciation of these couches at all? If so, would I list these couches in my 2015 return or 2016 return?
My tenant is using a small amount of my furniture (dining table, lamp, etc). Should I list these items in my 2015 return or wait until 2016?
I made a lot of repairs (such as molding, repainting, new furnace vents) on my home a couple of months before my house was ready and available for rent, although for what it’s worth, I was holding out the house out as a filming location during these repairs. Can I write-off these early expenses?
Also TurboTax is asking me to enter fair market value of the rental property on the date that it was ready and available for rent. Should I use the assessed value shown on my property tax bill, land and / or improvements? Or should I enter the Zillow value which is about DOUBLE what the tax assessor is reporting? The house has more than doubled in value since I purchased it in 1999.
TurboTax is asking me for fees paid by me when I bought the house in 1999, such as recording fees, document preparation fees, title insurance, etc. It may be difficult to find this paperwork. Can I make estimates? Or do these costs matter? I entered hypothetical numbers and it didn’t change my taxes due.
Can I write off purchased books on Landlording and tenant / landlord law? If so would this be under the category of “professional fees”?
NOTES: Once my tenant moves out in 1 to 2 years I do not plan on renting my home again. I will move back in.
Submitted: 9 months ago.
Category: Tax
Expert:  Robin D. replied 9 months ago.

Hello

For 2015 you would add to the cost of the home the expenses you had to get it ready for rental.

You cannot deduct any of those as you did not use the house for rental.

The furniture you purchased and sold is not reported. The items you kept and are still in the home will be shown on your 2016 return.

Because you never had rental in 2015 you will wait till 2016 to first complete the Schedule E.

The value of the house is used to start your depreciation. You get to use the lower of value when it changed to rental or the cost (less land value).

You can deduct the books you purchased but again, that would be on 2016.

Customer: replied 9 months ago.
Are you saying that I can NEVER report loses on the furniture and bedding that was purchased and sold, not even in 2016?Again, TurboTax is asking me to enter fair market value of the rental property on the date that it was ready and available for rent. Should I use the assessed value shown on my property tax bill, land and / or improvements? Or should I enter the Zillow value which is about DOUBLE what the tax assessor is reporting?And again, TurboTax is asking me for fees paid by me when I bought the house in 1999, such as recording fees, document preparation fees, title insurance, etc. It may be difficult to find this paperwork. Can I make estimates? Or do these costs matter? I entered hypothetical numbers and it didn’t change my taxes due.
Expert:  Robin D. replied 9 months ago.

The furniture was not used for business. Even though you used it for pictures that is not enough.

The actual pieces that stayed you can depreciate the cost of those only.

You can use appraised value. Most use the property tax amount unless they have paid for an appraisal.

The amount when you purchased is needed to see which is more, the value when you changed to rental or the actual cost. You should not estimate. If you do not have the closing from when you purchased then do not put anything. They matter but only to determine what amount is for depreciation.

Customer: replied 9 months ago.
The furniture (beds and bedding) was not used by me either. And I could not hold the house out as an Air BnB or VRBO.com rental without buying these extra beds and bedding. As soon as I rented out my house (in 2016) as a mainly UNfurnished house I had no use for this furniture. Still doesn't matter? Can't I expense it as "supplies"?
Expert:  Robin D. replied 9 months ago.

You should not claim the furniture.

You did not rent til 2016 and the furniture was sold. Even if you did use it for rental you would only be allowed a very small percentage as depreciation and then you would have to show that it was sold and subtract the depreciation from the purchase which would lower your cost and possibly make you have a gain to pay tax on.

Customer: replied 9 months ago.
Actually I didn't sell the furniture until I had found a tenant for 1 year lease. This was in 2016.
Expert:  Robin D. replied 9 months ago.

Then if you try and claim it for 2015 and you sold in 2016 you would have to report the sell on 2016.

I would still say start you r rental reporting on 2016 when you actually had rental.

Customer: replied 9 months ago.
OK. 2016 then. But are there some types start up costs (2015 repairs, 2015 listing fees, 2015 legal fees) that MUST be reported in 2015? Or can they ALL be put off until and deducted in 2016?
Expert:  Robin D. replied 9 months ago.

Those items are added to you cost of the home.

You do not lose them just add those to the amount you paid for the house for depreciation purposes in 2016.

Please remember to rate my service excellent once you have all the information you need. If you have any other questions, please ask me – I’ll be happy to respond as you can see. Thank you!

Expert:  Robin D. replied 9 months ago.

Hi Pete, just checking to see if you completed our session

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