duplex one property or two?

[Possi]

My client purchased a duplex as rental property last year.
Can I treat it as one property and depreciate it as one? Seems like I should do that, but something is holding me back.
One mortgage, one property, right?

[FEDUKE404]

I vote for two

I would probably consider setting it up as two, since it's far simpler to do so now than later. There may well be future capital improvements to one unit that differ from the other. Also, never forget the possibility that somewhere down the road one unit may be sold prior to the other.

This assumes client is not currently nor in the future plans to live in either unit, as that is a completely different can of worms.

I've had several arrangements of this duplex type, and find two sets of records better than one. There's a little more accounting time, but the software can handle things pretty well. Just be extra careful you squeeze out all of the numbers from the closing statement for that "first" cost basis entry.

Good luck!

FE

[BOB W]

My client purchased a duplex as rental property last year.
Can I treat it as one property and depreciate it as one? Seems like I should do that, but something is holding me back.
One mortgage, one property, right?

I would, but if one side is ever used for personal use costs would have to be divided...Which I'm sure you know.

[Possi]

this client

this client might one day live there. I never know what he will pull out of his hat. He also bought a barber shop the end of last year, but it wasn't up and running until Jan 1 of 08. I'll amortize his start up costs in '08.
right???

[Roland Slugg]

Prefer one, not two

I suppose you "could" set it up as two units, just as you "could" set up a 200-unit apartment complex as 200 units. Personally, I would set it up as a single property ... unless the following applies ......

If the two units are really separate parcels and could be sold separately, then I would treat them as two single-family homes.

[fliszt]

For my clients

I have set up the duplexes as 2 units. Total cost basis is divided by percentage of sq.footage of each unit less land value. Utilities are picked by each side so there is no allocation of utilities. Taxes are divided by the sqft method. Repairs, improvements, etc are then listed on the appropiate unit. I find this method to be good for my clients.

[FEDUKE404]

STILL vote for two

I suppose you "could" set it up as two units, just as you "could" set up a 200-unit apartment complex as 200 units. Personally, I would set it up as a single property ... unless the following applies ......

If the two units are really separate parcels and could be sold separately, then I would treat them as two single-family homes.

Although the "200 unit" point is noted, that probably would be a true professional business endeavor. I've had several dealings with duplex arrangements (college town). Situations have involved ownership of one unit of the two going from personal to rental, and others going from rental to personal.

Duplex owners do very strange things.....

While it certainly is not necessary to separate the two properties, some years hence you might perhaps thank me for suggesting you do so now.

FE

[Possi]

I shall...

...thank you now.... and split the properties now...

[joanmcq]

On some of these answers it depends if it is a duplex or a half-plex. A half plex is a separate property, but is a half of a building, whereas a duplex is one parcel, even if it is two buildings on one parcel. I've owned both, and the half-plexes were completely separate properties, but the duplex had one utility bill for water/sewer/garbage (which is paid by the owner here in Sacramento) even though it was two buildings on one parcel. We kept the repairs for unit A & Unit B accounted for separate on the duplex, but treated it as one rental property on Schedule E.