If you are planning on converting your existing home to an income producing rental property you will want to be very clear about what expenses you can write off and depreciate.
Your renovation expenses, for federal purposes are categorized as improvements and need to be depreciated. Any renovations you have done to get the rental property available for rent are considered capital improvements and are not fully deductible. The improvement is rather depreciated over the life of a rental property, which is 27.5 years.
Please refer to the 2013 IRS publication #527 for more details. This informative publication explains rental expense versus improvements, depreciation, as well as tax basis for property when it is converted from personal to business use.
Your Investment Property is a business venture and should be structured as such. This requires a team approach with your Accountant, Attorney, Insurance Agent and Property Manager. Remember to ALWAYS seek professional help before you start converting your property from a personal residence to an income producing property. The advice you receive from these trusted professional will address your tax implications and address your added liability exposure plus much more!
For assistance with Rent Tenant Placement and Property Management contact Acuity Group! We can assist you with all of your Rental and Property Management needs! To learn more about renting out your investment property click HERE.
Author: Stephanie Danielson, Broker/Owner
“If you are thinking of buying, selling, renting your home, or leasing real estate this year I’d love to hear from you! Working with an experienced professional can boost your profits!”
If you need assistance Selling or Buying Real Estate contact Stephanie Danielson: Direct: 612-242-8747 or Stephanie@ACGproperty.com
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Acuity Group Real Estate Professionals
564 Dodge Ave Suite A
Elk River MN 55330
Property Management and Residential Rentals, Listing & Buyer Specialists, golf course properties, water front properties, acreage & hobby farms, condos & townhomes, association maintained properties, senior housing, luxury homes, vacation & secondary housing, CDPE (Certified Distressed Property Expert), Short Sale Specialist and REO sales & Investment property.
Serving the following Minneapolis Cities & Suburbs: Elk River MN, Zimmerman MN, Big Lake MN, Rogers MN, Otsego MN, St. Michael MN, Albertville MN, Princeton MN, Ramsey MN, Anoka MN, Nowthen MN, Monticello MN, Oak Grove MN, Burns Township MN, Champlin MN, Dayton MN, Hassen Township MN, Coon Rapids MN, Blaine MN, Fridley MN, St. Francis MN, Livonia Township, Andover MN, Becker MN, Baldwin Township, Orrock Township, Plymouth MN, Maple Grove MN, Osseo MN.
Serving the following Minnesota Counties: Sherburne, Anoka, Wright, Hennepin and portions of Isanti County