How to report duplex with one unit rented

Forum|Forum|2 years ago
February 17, 2024
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I have a duplex that I typically rent out and have historically reported as a single entity on my schedule E categorized as a multi-family. This year, I decided to renovate one of the units of it, so one unit was rented for the full year and the other unit was not rented at all (under renovation not personal use). Now I am not sure how to answer the "Was <property> rented every single day in 2023?" question and how it will need to show on the schedule E form. Any help or advice is appreciated.

Best answer by RobertB4444

Yes, it was rented all year. Since the property is treated as one unit for tax purposes then nothing has changed for this year.

The cost of renovations is a capital expenditure. You will capitalize and depreciate that once it is completed. So you can't do anything with those costs this year.

Everything else is just as it always has been. Your rental income was lower this year because only half the place was rented out. Which is accurate. Your expenses are higher because you had to pay utilities and those kinds of things.

@random7789

RobertB4444Answer

Yes, it was rented all year. Since the property is treated as one unit for tax purposes then nothing has changed for this year.

The cost of renovations is a capital expenditure. You will capitalize and depreciate that once it is completed. So you can't do anything with those costs this year.

@random7789

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random7789Author

Thank you so much for this, I was so worried I had walled myself into a complex situation but this helps put my mind at ease. Thank you again for taking the time to answer