detached garage rental

[RET70_20]

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

[sjrcpa]

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.

[abctax55]

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.

[rbynaker]

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]

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....

[BobKamman]

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]

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.

[abctax55]

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

[abctax55]

@RCBCPA 

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

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