Repaying Depreciation

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EmptyNest

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Ok we have talked about this in the past...used to be close your B & B, live there for 2 years as a residence and you did not have to pay back the depreciation you took for the business. Well, it has changed. Just left my CPA's office and he says...no matter when we sell our place...we are going to have to pay back the depreciation we took for the B & B when in business. :-(
Guess I better have him let me know exactly how much that is going to be so I am not shocked when it does happen.
 

egoodell

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So I guess what someone else did about 5 years ago is no longer acceptable? He sold and purchased a home with a cabin and rents the cabin out and avoided it that way. Sheesh I was hoping in the future to do that...
RIki
 

EmptyNest

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So I guess what someone else did about 5 years ago is no longer acceptable? He sold and purchased a home with a cabin and rents the cabin out and avoided it that way. Sheesh I was hoping in the future to do that...
RIki.
Yeah I know who you mean and no..the regs have changed from 5 years ago.
 

JBloggs

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My CPA mentioned this the other day as well.
 

wendydk

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Just keeps getting better and better, doesn't it? In a few years, there won't be any small B&B's left...can't get their hands on any cash, have to pay back their depreciation...can't wait to hear what's next.
 

EmptyNest

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Just keeps getting better and better, doesn't it? In a few years, there won't be any small B&B's left...can't get their hands on any cash, have to pay back their depreciation...can't wait to hear what's next..
Yeah kind of depressing...almost a "why bother" there's not much else worth doing that you can deduct that will make that much difference if you have a small place that is.
 

gillumhouse

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Just keeps getting better and better, doesn't it? In a few years, there won't be any small B&B's left...can't get their hands on any cash, have to pay back their depreciation...can't wait to hear what's next..
I also get to pay personal property tax on everything - I have to submit a schedule C to the County every year so they are sure to get anything I may have purchased. I have stopped claiming anything. The only thing I claim is the food and they take whatever was claimed on my schedule C and divide by 12 to decide what I had on hand on July 1 - the inventory date. If I claim my computer equipment, I pay a tax on it EVERY YEAR- they deduct 10% on the value each year but I still get to pay on it. And I am paying on old computer equipment because it took me a couple filings to figure it out.
 

Samster

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This is why we chose not to depreciate anything despite the fact that I pay personal property tax on what the City considers to be part of the business. I sent them a blank form because we depreciated nothing. Fine, they still assessed us a nice chunk of change on what I'm not sure because they of course don't send you anything back. We are deducting hard expenses for the guests and our second house and the mortgage, etc. on that house because it is strictly a "rental". We are not even deducting our own mortgage. Still, we will have enough to deduct to have made very little money our second year in business. This was a big factor in our decision to close the business.
It is sad, very sad that small B&Bs like us have almost all the same overhead as larger ones and can really make no money. Many people have the privilege of being a steward of a large historic home and they live in a tiny part of it. Reality sucks.
 
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This is why we chose not to depreciate anything despite the fact that I pay personal property tax on what the City considers to be part of the business. I sent them a blank form because we depreciated nothing. Fine, they still assessed us a nice chunk of change on what I'm not sure because they of course don't send you anything back. We are deducting hard expenses for the guests and our second house and the mortgage, etc. on that house because it is strictly a "rental". We are not even deducting our own mortgage. Still, we will have enough to deduct to have made very little money our second year in business. This was a big factor in our decision to close the business.
It is sad, very sad that small B&Bs like us have almost all the same overhead as larger ones and can really make no money. Many people have the privilege of being a steward of a large historic home and they live in a tiny part of it. Reality sucks..
My plan is.......if it ever happens....is to work/develope this B&B for another 10 years (will be 76 then) turn over the B&B to one of my 4 or more daughters while I shuffle around the kitchen cooking b'fast for guest. Now how do I divide it all when I pass on ? One daughter wants the home to be a vacation house for them all when I pass on. Who mowes the 3/4 acre lot,etc,etc. One daughter does live in Bridgewater now,they are sort of interested and son in law is a great help repairing things now. Hopefully this will not be taxed for a long time if it stays in the family.......if it ever happens.....Suggestion/ideas ? welcomed..Mary in Bridgewater
 

egoodell

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This is why we chose not to depreciate anything despite the fact that I pay personal property tax on what the City considers to be part of the business. I sent them a blank form because we depreciated nothing. Fine, they still assessed us a nice chunk of change on what I'm not sure because they of course don't send you anything back. We are deducting hard expenses for the guests and our second house and the mortgage, etc. on that house because it is strictly a "rental". We are not even deducting our own mortgage. Still, we will have enough to deduct to have made very little money our second year in business. This was a big factor in our decision to close the business.
It is sad, very sad that small B&Bs like us have almost all the same overhead as larger ones and can really make no money. Many people have the privilege of being a steward of a large historic home and they live in a tiny part of it. Reality sucks..
My plan is.......if it ever happens....is to work/develope this B&B for another 10 years (will be 76 then) turn over the B&B to one of my 4 or more daughters while I shuffle around the kitchen cooking b'fast for guest. Now how do I divide it all when I pass on ? One daughter wants the home to be a vacation house for them all when I pass on. Who mowes the 3/4 acre lot,etc,etc. One daughter does live in Bridgewater now,they are sort of interested and son in law is a great help repairing things now. Hopefully this will not be taxed for a long time if it stays in the family.......if it ever happens.....Suggestion/ideas ? welcomed..Mary in Bridgewater
.
Speaking as one that took care of my dad by myself with constant orders from my sister half the country away, with the end of my brother and I having to go to a lawyer and a judge to be able to sell the house, I would recommend that you draw up something legal to protect the local child from having to do all the work, and protect the distant child from losing out if she wants to keep the property.
Give each child the ability to buy the others out if they don't want to keep it. Make it workable for the one not keeping and workable for the one that wants to keep it. They may change their minds about the whole issue 10 or 20 years down the road.
My sister wanted to set up a situation to buy my brother and me out that would have had us getting our money when we turned 150 years old.
RIki
 
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This is why we chose not to depreciate anything despite the fact that I pay personal property tax on what the City considers to be part of the business. I sent them a blank form because we depreciated nothing. Fine, they still assessed us a nice chunk of change on what I'm not sure because they of course don't send you anything back. We are deducting hard expenses for the guests and our second house and the mortgage, etc. on that house because it is strictly a "rental". We are not even deducting our own mortgage. Still, we will have enough to deduct to have made very little money our second year in business. This was a big factor in our decision to close the business.
It is sad, very sad that small B&Bs like us have almost all the same overhead as larger ones and can really make no money. Many people have the privilege of being a steward of a large historic home and they live in a tiny part of it. Reality sucks..
My plan is.......if it ever happens....is to work/develope this B&B for another 10 years (will be 76 then) turn over the B&B to one of my 4 or more daughters while I shuffle around the kitchen cooking b'fast for guest. Now how do I divide it all when I pass on ? One daughter wants the home to be a vacation house for them all when I pass on. Who mowes the 3/4 acre lot,etc,etc. One daughter does live in Bridgewater now,they are sort of interested and son in law is a great help repairing things now. Hopefully this will not be taxed for a long time if it stays in the family.......if it ever happens.....Suggestion/ideas ? welcomed..Mary in Bridgewater
.
Speaking as one that took care of my dad by myself with constant orders from my sister half the country away, with the end of my brother and I having to go to a lawyer and a judge to be able to sell the house, I would recommend that you draw up something legal to protect the local child from having to do all the work, and protect the distant child from losing out if she wants to keep the property.
Give each child the ability to buy the others out if they don't want to keep it. Make it workable for the one not keeping and workable for the one that wants to keep it. They may change their minds about the whole issue 10 or 20 years down the road.
My sister wanted to set up a situation to buy my brother and me out that would have had us getting our money when we turned 150 years old.
RIki
.
Your right.......and I have noticed that the true nature of a person comes out when a relative (father/mother,etc) has died in a family and the estate is divided up among remaining relatives...Mary in Bridgewater.
 

egoodell

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This is why we chose not to depreciate anything despite the fact that I pay personal property tax on what the City considers to be part of the business. I sent them a blank form because we depreciated nothing. Fine, they still assessed us a nice chunk of change on what I'm not sure because they of course don't send you anything back. We are deducting hard expenses for the guests and our second house and the mortgage, etc. on that house because it is strictly a "rental". We are not even deducting our own mortgage. Still, we will have enough to deduct to have made very little money our second year in business. This was a big factor in our decision to close the business.
It is sad, very sad that small B&Bs like us have almost all the same overhead as larger ones and can really make no money. Many people have the privilege of being a steward of a large historic home and they live in a tiny part of it. Reality sucks..
My plan is.......if it ever happens....is to work/develope this B&B for another 10 years (will be 76 then) turn over the B&B to one of my 4 or more daughters while I shuffle around the kitchen cooking b'fast for guest. Now how do I divide it all when I pass on ? One daughter wants the home to be a vacation house for them all when I pass on. Who mowes the 3/4 acre lot,etc,etc. One daughter does live in Bridgewater now,they are sort of interested and son in law is a great help repairing things now. Hopefully this will not be taxed for a long time if it stays in the family.......if it ever happens.....Suggestion/ideas ? welcomed..Mary in Bridgewater
.
Speaking as one that took care of my dad by myself with constant orders from my sister half the country away, with the end of my brother and I having to go to a lawyer and a judge to be able to sell the house, I would recommend that you draw up something legal to protect the local child from having to do all the work, and protect the distant child from losing out if she wants to keep the property.
Give each child the ability to buy the others out if they don't want to keep it. Make it workable for the one not keeping and workable for the one that wants to keep it. They may change their minds about the whole issue 10 or 20 years down the road.
My sister wanted to set up a situation to buy my brother and me out that would have had us getting our money when we turned 150 years old.
RIki
.
Your right.......and I have noticed that the true nature of a person comes out when a relative (father/mother,etc) has died in a family and the estate is divided up among remaining relatives...Mary in Bridgewater.
.
Mary at Bridgewater Inn and Cottage said:
Your right.......and I have noticed that the true nature of a person comes out when a relative (father/mother,etc) has died in a family and the estate is divided up among remaining relatives...Mary in Bridgewater.
And on the other side - one never knows how one will react when you lose someone so close as a parent. You grieve so terribly you don't realize some things will suddenly set you off and you can't possibly let go/keep something. Your kids may think they will know how they will handle it, but they may surpise themselves at what they simply can't let go of. I'm still wearing some of my mother's clothes, and have made an oversized slouch jacket of my dad's tuxedo jacket. Among many other things.
Riki
 

gillumhouse

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This is why we chose not to depreciate anything despite the fact that I pay personal property tax on what the City considers to be part of the business. I sent them a blank form because we depreciated nothing. Fine, they still assessed us a nice chunk of change on what I'm not sure because they of course don't send you anything back. We are deducting hard expenses for the guests and our second house and the mortgage, etc. on that house because it is strictly a "rental". We are not even deducting our own mortgage. Still, we will have enough to deduct to have made very little money our second year in business. This was a big factor in our decision to close the business.
It is sad, very sad that small B&Bs like us have almost all the same overhead as larger ones and can really make no money. Many people have the privilege of being a steward of a large historic home and they live in a tiny part of it. Reality sucks..
My plan is.......if it ever happens....is to work/develope this B&B for another 10 years (will be 76 then) turn over the B&B to one of my 4 or more daughters while I shuffle around the kitchen cooking b'fast for guest. Now how do I divide it all when I pass on ? One daughter wants the home to be a vacation house for them all when I pass on. Who mowes the 3/4 acre lot,etc,etc. One daughter does live in Bridgewater now,they are sort of interested and son in law is a great help repairing things now. Hopefully this will not be taxed for a long time if it stays in the family.......if it ever happens.....Suggestion/ideas ? welcomed..Mary in Bridgewater
.
Speaking as one that took care of my dad by myself with constant orders from my sister half the country away, with the end of my brother and I having to go to a lawyer and a judge to be able to sell the house, I would recommend that you draw up something legal to protect the local child from having to do all the work, and protect the distant child from losing out if she wants to keep the property.
Give each child the ability to buy the others out if they don't want to keep it. Make it workable for the one not keeping and workable for the one that wants to keep it. They may change their minds about the whole issue 10 or 20 years down the road.
My sister wanted to set up a situation to buy my brother and me out that would have had us getting our money when we turned 150 years old.
RIki
.
Your right.......and I have noticed that the true nature of a person comes out when a relative (father/mother,etc) has died in a family and the estate is divided up among remaining relatives...Mary in Bridgewater.
.
I was not worried about my siblings, but spouses on the other hand.... I was pleased to discover my siblings did as I thought they would - no one cared a fig about "the money" when Daddy died. When our Mom died, my brother stepped in to prevent a step-brother from robbing everyone by pointing out a legality that forced the use of my brother's lawyer to settle the estate. I do not expect my kids to squabble either and since none of them really "belongs" here, I know the place would be sold. That is why I hope to be able to sell it as a B & B before I die. If they sell it, it will be a residence and my City will lose its quality lodging place.
 

Innkeep

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Catlady,
My CPA isn't aware of the depreciation rules changes. I'm not doubting that they have changed, but he's usually right up on that sort of stuff. I posted a thread on PAII forum which was totally ignored. My CPA suggested I try to find out more specifically what part of the tax code changed-- . If you don't need to talk to him again this tax season, I'd be happy to send him an email if you send me his email addy off forum.
 

JBloggs

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IK, mine said this as well, and in fact the only way to avoid it is to sell at a loss. I said, Uh no, not trying to do that, thank you very much for the suggestion tho.
 

EmptyNest

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Catlady,
My CPA isn't aware of the depreciation rules changes. I'm not doubting that they have changed, but he's usually right up on that sort of stuff. I posted a thread on PAII forum which was totally ignored. My CPA suggested I try to find out more specifically what part of the tax code changed-- . If you don't need to talk to him again this tax season, I'd be happy to send him an email if you send me his email addy off forum..
Sorry he said once a business always a business. I will ask him what part of tax code changed when I go pick up my bad news:-(
I believe Greg & Raetz Accountants of VA also stated the same thing in one of the workshops they did for our association conference. I think Jeanne can add to this as well as she also was told similar.
 
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