I own a 2400 sq ft home that is not zoned a duplex. However it is split into two separate living quarters with separate driveways and entrances, kitchens, etc. I used to use the lower unit for entertainment and as a workshop… the entire fridge was filled strictly with beer, “my beer fridge” sigh…
anyhow! After a while my investing brain kicked into gear and I decided to convert it into a rental property (a move I should have made from the beginning). Its been rented for a while now and we have been blessed with a wonderful family down there with whom we get along great!
I’m in the midst of tax season now, and am using TurboTax to calculate this years tax bill. I’m several hours into it – like 18 actually, ugh – and my dilemma is that I cannot figure out the best way to enter the property into TurboTax. I’ve tried using the internal function for renting out part of your home, but TurboTax splits all of the expenses by the rental / occupy percentage of 50%. I understand that this is correct for a lot of the expenses but I also have several that were incurred strictly on the rental unit in getting it ready to rent – such as adding plumbing and electrical facilities for a washer / dryer. I can’t seem to find a way to expense these at 100% for that unit.
My question therefore is can I just enter the rental unit as its own asset and deduct expenses as appropriate (50% for shared expenses and 100% for expenses applied just to the unit) and then enter 50% deductions on the personal side (I understand this is a different part of the return, but its location escapes me right now, I’m sure TurboTax will ask about it later)? Is this a valid approach? If I move in the future and rent out the other unit I can then just add that unit as a separate asset in TurboTax at that time, correct?
Let me know if I’m off base on this!
Also – as a bonus 
My plumbing / electrical work – should I consider that an improvement or can I just expense it you think? Probably $ 1500 altogether but its lots of little stuff. Thanks – Yahoo answers is the best!
How others found here:
- adding plumbing for washer dryer depreciation
- duplex turbotax