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This is a question I often get asked by business owners and rental property owners in the real estate industry. Depreciation begins when you place your asset in service for the production of income. An asset is placed in service when it is ready and available for a specific use.For example, you purchased a house to use as short-term rental on January 1 and you make extensive repairs to the property to fix it up for rent. On March 1, the house was ready for rent and the rental property is advertised to be rented. The rental property is considered placed in service in March because it was ready and available for rent. Depreciation will start in March. Should you

In basic terms, real estate investors purchase real estate with the intention of holding the properties to gain financial return. On the other hand, real estate dealers typically acquire and sell real estate in the ordinary course of their trade or business. The determination of investor vs. dealer is mainly based on intent and activities at the time of purchasing the property and the point of selling the property. For example, if a taxpayer buys a real property that needs improvements, renovate it, and sells it for profit, it is most likely that taxpayer is going to be considered a dealer.  Is it beneficial to have a dealer or investor status? It all depends on what you’re trying to accomplish