Personal property from Primary to STR

[strongsilence]

When a personal residence converted to an STR five years ago, I failed to ask the taxpayer about personal property that she left in it. (FMV 80K, Cost 40K) So, no depreciation has been taken. I feel like a failure.  Tax planning and preparation requires more skill I feel like I have.  And I think it is because I don't have a drive or impulse to find deductions, a curiosity, a questioning ache to search for tax opportunities.

*I will add the property to the 2025 tax return. I do not think amending prior tax returns is needed.

The reason this came up is because the county last month sent (the first) notice to her to pay the business property tax.

[sjrcpa]

Her personal property increased in value?

[sjrcpa]

" I failed to ask the taxpayer about personal property that she left in it"

I would not beat yourself up over this. We all (OK maybe a couple unnamed people here are perfect) make mistakes.

I'm thinking you made a mistake in your numbers. When converting personal use property to business, the basis for depreciation is lower of cost or market value at the time. How much could her used stuff really be worth at the time she converted to STR?

[sjrcpa]

One more thing before you go adding to this year's depreciation schedule. How much of that stuff from 5 years ago is still around? Short term rentals get trashed a lot and/or get a lot of use. Stuff gets destroyed/wears out and has to be replaced frequently.

[BobKamman]

I'm surprised that the Form 3115 fans haven't jumped here in here to admonish you that it must be filed for 2025; the fix isn't the amended returns you want to avoid.  How much of the 40K allowable depreciation do you want your client to recapture, if the place is sold?  

[Karl]

Give yourself grace. We are all tired this time of year. And we all can miss asking ALL the questions. Especially with rentals. Those have the most annoyingly long decision tree of "if-this-then-thats."

As Bob said, 3115 instead of PY amendments. Definitely worth it if she plans to own it until death and her heirs will get step-up in basis.

You also could just save the 3115 until next year to be able to tackle it at the start of next tax season with a clearer head.

[strongsilence]

Thank you Karl and Bob