Short-term rental expenses before available to rent

Forum|Forum|5 years ago
February 17, 2021
2 replies
17 views

Client purchased a duplex and fixed it up and furnished it for months. It was not available for rent in 2020, but it is available to rent in 2021.

It is a short-term rental, rented by the night, that does not provide substantial services, so it should be reported on Sch E.

How do we account for the thousands of dollars he spent to supply the house with silverware, appliances, games, wall mounts, pillows and etc. It took months to get the duplex ready to rent. How can these expenses be deducted?

Lacerte Tax

This topic has been closed for replies.

Best answer by qbteachmt

"and these expenses would be start up expenses?"

You didn't really list "expenses." Some of that stuff is Supplies and some is Assets. You are going to have different classes (types) of Assets in this operation. Building, Furniture, etc, are all treated differently. Supplies expense are things that wear out and are replaced constantly, such as linens. Although, not in service = not using up linens at that point.

Startup Costs are permits, licenses, electricity, things you would deduct as expenses if this was already in place. But assets get depreciation, or fall in the accelerated depreciation category (depends on the tax rules in place that specific year).

Here's a nice article:

https://www.therealestatecpa.com/blog/real-estate-start-up-costs

BobKamman

Level 15

No one washes the dishes or launders the bedding?

C

codeblue123Author

Level 3

I expect he would do those services. So might this be a Sch C and these expenses would be start up expenses?

BobKamman

Level 15

This Airbnb stuff is definitely a "gray area." If I come across any clients who want to get into that, I'll send them to you.

qbteachmtAnswer

Level 15

"and these expenses would be start up expenses?"

You didn't really list "expenses." Some of that stuff is Supplies and some is Assets. You are going to have different classes (types) of Assets in this operation. Building, Furniture, etc, are all treated differently. Supplies expense are things that wear out and are replaced constantly, such as linens. Although, not in service = not using up linens at that point.

Startup Costs are permits, licenses, electricity, things you would deduct as expenses if this was already in place. But assets get depreciation, or fall in the accelerated depreciation category (depends on the tax rules in place that specific year).

Here's a nice article:

https://www.therealestatecpa.com/blog/real-estate-start-up-costs

Don't yell at us; we're volunteers

Sign up

Login with SSO

Let's get you signed in

Login with SSO