Vacation / Rental Home

[Tal10]

Conflicted!

Client purchased a condo in January 2024. He made multiple trips to the condo in 2024 for the sole purpose of making improvements and repairs, and furnishing the condo. The renovations were completed, and my client rented out the property for 2 months in 2024. His intention when he bought the condo was to rent it out 3 months of the year, and have it available for personal use the other 9 months. It's my understanding that days spent at the condo solely for the purposes of making repairs and renovations are not considered personal use days. So, technically there are 0 personal use days, and 61 rental days. Client spent $75,000 on furnishings in 2024, and it just does not feel right that he should be eligible for bonus depreciation on such. As a taxpayer, I don't think it's right that I have to foot the bill for what is mostly for his personal benefit, and I'm sure the IRS doesn't like this either. But if these are truly the facts, does he get these deductions? Since it is not listed property, there would be no recapture requirements in 2025 either.

[BrewOne]

I had one similar, not as bad on furnishing, but constantly traveling to their condo even when they had a management company.  But they vehemently insisted that every trip was to work on the condo and all I could really do is say that they might be required to document what they actually did on every trip if they were audited (I also "culled" them from my client list after that return).  I would try to avoid judging them based on "taking advantage" of the law, but it's still your choice whether or not to prepare their taxes.

One factor is if part or all of the loss is not allowed, special depreciation is not really doing much for them.

[Lee B]

With second homes stuff happens and plans often change so just because you can doesn't always mean you should