Welcome back! Ask questions, get answers, and join our large community of tax professionals.
cancel
Showing results for 
Search instead for 
Did you mean: 

detached garage rental

RET70_20
Level 1

Client turned his detached garage into a rental property. For sch E, what would the cost be. The garage was built with house.

0 Cheers
8 Replies 8
sjrcpa
Level 15

It would be original cost of the garage plus costs to turn it into a rental.

Original cost should be in the contract to build.


ex-AllStar
abctax55
Level 15

Your client should have documentation of the costs incurred; hopefully detailed as to house vs garage.

If not, maybe the contractor can provide the breakdown.

If not,  your client may need to approximate the breakdown using square footage amounts to 'build a garage' at the time of construction.   Be wary of "guessing too high" syndrome.  

Then, as Susan says, ADD the costs of conversion.

Former Chump..umm... AllStar...This message was typed from 6 feet away so you can safely read it immediately.

If a post answers your question, click on *Accept as solution* for future searches
rbynaker
Level 11

Some localities break down the assessment values by structure.  Just depends, we're not even consistent from one county to the next here in VA.  If you do have a breakdown that may give you an idea of relative value which might be applicable to total cost to arrive at relative cost.  I like the other methods mentioned earlier better, but they're not always available.

abctax55
Level 15

OR.....  maybe the insurance has the detached garage listed separately (ours does; we have a detached garage but it was built long after the house...).  That would NOT be the cost to use, but it might give a reasonable ratio.

Too bad the OP isn't participating in this fascinating discussion....

Former Chump..umm... AllStar...This message was typed from 6 feet away so you can safely read it immediately.

If a post answers your question, click on *Accept as solution* for future searches
BobKamman
Level 13

Maybe it was built in 1765 and originally called a carriage house.  First you start out by guessing how much of the original purchase price should be attributed to the land.  Then you can guess on how to divide the remaining cost between the two buildings.  Cost per square foot is good enough for government work. 

RCBCPA
Level 2

A lot of work for small deduction.  Take the direct expenses of conversion and depreciate them as a commercial property.  I see it often an take a conservative approach.

0 Cheers
abctax55
Level 15

My detached garage, built in 1985, cost $ 100,000.   And it's a basic 12' x 24' structure, except we did trusses (or no trusses.... whatever makes the upstairs usable for storage) which cost a bit more. 

So at a 25% Federal bracket, that's a $ 909 tax savings.  

That's a nice dinner here in CA  /S

 

Former Chump..umm... AllStar...This message was typed from 6 feet away so you can safely read it immediately.

If a post answers your question, click on *Accept as solution* for future searches
abctax55
Level 15

@RCBCPA 

Why commercial?   MY ass-u-mption was residential.

But, again, the OP has gone M.I.A.

Former Chump..umm... AllStar...This message was typed from 6 feet away so you can safely read it immediately.

If a post answers your question, click on *Accept as solution* for future searches