[quote=“savvyfinanciallatina, post:1, topic:1763”]
- How do I treat the expenses we made prior to renting the house? [/quote]
All of those additions get added to your cost basis. Land is not depreciated btw, only structure. Your property tax bill from your county may have a land number and structure number. There are other ways to calculate it. I don’t know off the top of my head though.
2. I read somewhere about establishing the market price of the house and log it in the books. Anyone understand this topic? Potentially could explain a bit more.[/quote]
That’s only something you need to be concerned with if your property has gone down in value since you purchahed. It’s the lesser of the two. If it’s gone up (which I imagine it would have if your talking about selling for gains without paying taxes), then your cost basis is your purchase price plus any adjustments for additions. See answer to first question.
However, you are required to rent out your property for at least a fair market value rate. It’s mostly nebulous but basically the idea is you can’t say, rent out a house to your parents for $10 a month and deduct all the losses against your taxes. If you are trying to rent for profit (or at least a reasonable number, that couldn’t be argued that it wasn’t for profit, you’re fine.)
You should be able to determine fair market rent value just be googling around your area…
Yes, because whether you take it or not, the IRS assumes you did take it when you sell and you will owe the “recapture taxes” on it even if you didn’t take it. So there’s no reason not to take it.
TurboTax Premier will save you a ton of time on tax prep.