rental property deductions
I purchased office furniture for $1,500 this year and purchased
three investment/rental properties. I will use the office furniture
to store all of the files related to the properties. Question: Can
I write off the furniture as a tax write-off?
In a rental property you can usually deduct the ordinary and necessary
expenses associated with the rental activity. Most of these expenses
are obvious, such as interest, taxes, maintenance and repairs. Some
of the other expenses you can deduct are indirect, such as automobile
expenses that are incurred to collect rental income or to manage,
conserve or maintain your rental property. A part of office expenses
would also be includable if the activity justifies maintaining an
office for the properties (i.e., ordinary and necessary). The amount
of the furniture expense appears reasonable, but I assume that the
furniture will be in your home, so you'll need to show that the
items are used exclusively for administering the properties. Otherwise,
only an allocable part of the expense may be allowed.
Since investment property is not a trade or business,
you must depreciate the furniture over its useful life. You cannot
expense it in the year of purchase as Section 179 expense. Section
179 expense only applies to the active conduct of a trade or business.
The useful life of furniture is seven years. The depreciation tables
can be found on Page 14 of Publication
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