Converting Your Home to Rental Property

When you make this transition you need to depreciate your old home that you have converted to rental property. How do you do that? Do you use the fair market value at time of conversion or something else? The answer is you use the lower of your cost or fair market value at the time you make it rental property. In a rising market for real estate most homeowners have to use their original cost plus the cost of significant improvements. Another step you have to take is to determine how much of your original cost should go to land if you have a single family home since land cannot be depreciated. Most property tax bills will tell you what % of the bill is for land vs the house so use that ratio to allocate an amount to land. Absent that information I allocate at least 20% of the original cost to land. If the rental is a condo,  I usually allocate all of the original cost to the building to depreciate.

Should you file a tax return for your child?

There are five situations where a federal tax return is needed for your dependent child:

1. If your child receives a 1099 showing non employee compensation over $400, a return is needed because self employment tax is due.
2. W-2 wages over $12,000
3. Dividends, interest, and capital gains over $1,050
4. Gross income greater than the larger of $1,050 of unearned income or wages up to $11,650 plus $350
5. Your child had federal withholding on his W-2 and you want to get it refunded.

In certain circumstances a child's income can be reported on the parent's return but it is usually better to file a separate return. 

Standard Mileage Rates for 2019

The business mileage rate increases to 58 cents per mile from 54.5 cents per mile for 2018. Medical and moving mileage goes to 20 cents a mile from 18 cents a mile. Charitable mileage remains at 14 cents a mile. Also for 2019, taxpayers cannot claim a deduction for unreimbursed employee travel expenses, and only the armed forces are allowed moving expenses now.