Your Life

Your Life

Major life milestones often have a major tax impact. Changes in your marital status, having a baby or adopting a child can have significant impact on your taxes. This is the place to ask questions about dependents, real estate, and other various scenarios that play a significant role in what taxes you pay.

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Pioneer
Posts: 1
Registered: ‎02-04-2018

Rental property = business?

We purchased a furnished property this year that we rent out weekly over the summer using a rental property manager.  We purchased indicating it is an investment property, but did not buy under an LLC or take any actions to incorporate.  We rented 60 days and have kept pretty good records of expenses.  Lastly, we received a 1099-MISC regarding our rental income.  A few questions:

1) Can we consider this a business allowing us to deduct business expenses?

2) If so, would we indicate the Principal business code as "531100 - Lessors or real estate"?  If not, what should we put?

3) Can I use the cash accounting method since I don't sell merchandise?

4) How do I determine the cost basis for furniture, appliances, etc. that came with the house for depreciation purposes?  Same question for items in my supporting home office that I bought several years ago (ex. desk, chair, computer)

5) Please explain the question "Is rent amount for this rentals and royalties worksheet?"

6) Do we need to consider the following as personal use: we had the house blocked from being rented but were not using it (i.e. it was empty)?

7) I have records for mileage I spent for business related activities, but I did not capture mileage at the start of the year.  I see it is looking for total miles driven vs business miles.  How do I prove total miles driven?

 

Thanks!

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Esteemed Neighbor
Posts: 200
Registered: ‎02-28-2016

Re: Rental property = business?

Rental property income, expenses and depreciation is reported on Schedule E. You can probably find many answers in this IRS Publication #527.

https://www.irs.gov/publications/p527