Depreciation & Taxes

[sleuth]

A Few Questions...

1. How do I go about figuring out depreciation due to renting out a room in my house (50% usage of the house by the renter).

2. For home improvements that are being included in the above-mentioned depreciation calculation, can I include the expenses from equipment purchases? (saws, tooling, etc.) Since I am repurposing part of the house as rental, doing a lot of restoration to features that were damaged when I moved in, and doing lots of major repairs while the renter lives here (can I consider that all as improvements rather than repairs? (e.g. replacing decks, fixing damaged walls, major repairs to AC/Heating system, etc.)

3. How do I figure what the fair market value of my home was in January '03?

4. Anyone have Turbotax Premier and doing something like this with their returns? How are you going about doing it? It seems like it's mostly set up if you have rental properties separate from your private residence.

TIA!

 

[Airwolf]

Do yourself a favor, DO NOT LISTEN TO ANYONE ON HERE ABOUT LEGAL MATTERS. It's a quick way to end up in hot water with the IRS. Go to a CPA to have your taxes done if you want to write off stuff due to your renter. Do NOT use a "Joe's Tax Service", use an actual CPA.

 

[aps45819]

Do yourself a favor, DO NOT LISTEN TO ANYONE ON HERE ABOUT LEGAL MATTERS.

Free advice is worth every penny.

I'm using TurboTax, but not renting part of my home.

 

[Oz]

TurboTax will do that for you.

If you're going to sell your home soon, you may want to avoid depreciating it because that lowers your cost basis, and increases your capital gains exposure when you sell the property. However, as recommended above, a CPA should advise you based on your specific finances.

 

[sleuth]

TurboTax will do that for you.

If you're going to sell your home soon, you may want to avoid depreciating it because that lowers your cost basis, and increases your capital gains exposure when you sell the property. However, as recommended above, a CPA should advise you based on your specific finances.

Oz... I thought about that, but under current tax laws, if I sell my home soon, I can walk away with up to $250,000 free and clear.

 

[willie]

Oz... I thought about that, but under current tax laws, if I sell my home soon, I can walk away with up to $250,000 free and clear.

How about the recapture on the claimed depreciation?

 

[JabbaJawz]

Oz... I thought about that, but under current tax laws, if I sell my home soon, I can walk away with up to $250,000 free and clear.

Get your taxes done. You'll pay just over $100 and get the max. deduction.

Oh, and are you kidding me?? I highly doubt that your house has gained 250K in value.

 

[Dymphna]

Don't figure it out yourself, Sleuth. Leave it to the professionals. Like JJ said, it'll cost you around $100 to get it done and THAT is tax-deductable next year. It'll cost you a fortune if you screw it up and get audited, plus a good accountant can find other things for you to write off, that will save you more money, than that.

 

[sleuth]

I didn't say it did. I just said "up to".
And a neighbor down the road from me with a house that has a very similar layout than mine, along with a detached garage, finished basement, and only 0.25 acres of land, went for $125K more than what I paid for mine.

Minus the garage and the basement... add the additional acre of land that I have... and I figure I might be able to get $80-$100K more than what I bought mine for.

I could be way off.. but then I'm just guessing.


Dympha, I plan on having it done professionally. I just wanted to try it myself and see what my answers were. I hate just handing things over to someone I don't even know and having no clue whether they're doing a good job or not.

 

[willie]

Rent out the room, put the money in your pocket and forget about all the gimmicks. Who's going to know?