1065 two activities

[Unregistered]

I thought I posted this, but could not find. New partnership purchases two adjcent parcels of land. One has a house on it and they receive rent. The other is just a lot with no income being produced. Can all the expenses be grouped together as one rental activity? They assume the property values will be going up because of population growth and hope to sell in three to eight years at a nice profit???? The rental value of the house is not big and they assume the next owner to the property will tear it down.

I apologize if posted twice, but could not find it.

If two acitivites use rental and what investment????

Thank you.

[BOB W]

Joint Parcels

I would say that if the renters have full use of both parcels it can be viewed as a full rental. If not, one parcel is rental and the other is investment property. The only tax advantage to the vacant land being part of the "rental" is that the real estate taxes are deducted above the line (sched E) instead of sched A as "investment property". There may be some maintenance issues also on the second parcel that would not be deductible if investment property.