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Level 2

Chart of Accounts

We purchased 3 tiny homes, each one of them costing less than $1,000, paid for in full, $0 balance owed. What is the best account to list them under? Fixed Asset, Other Current Asset, Other Asset...

Any help is appreciated. 

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Best answer June 22, 2020

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Community Champion

Chart of Accounts

Under prior to 2017 rules on equipment a $500 threshold was in place but this safe harbor deminimis rule was expanded to $2500 per invoice or line item.  Not this is for EQUIPMENT and does not apply to purchase of or repair of permanent buildings. 

 

Your tiny houses are permanent structures for habitation. Consult your CPA to be sure but no matter the price, it is my opinion that all capital type costs related to a structure are fixed assets requiring depreciation.

 

Certain agricultural structures are exempt. Corn bins, chicken coops, etc.  But "house" is in the name of what you bought, it's presumed use is for human habitation. If these were strictly for display at home shows that would be another thing, and maybe they could be written off as an expense instead.

 

https://www.schgroup.com/resource/blog-post/irs-makes-major-change-fixed-asset-expensing-rules-benef...

 

https://www.irs.gov/businesses/small-businesses-self-employed/tangible-property-final-regulations

 

https://www.irs.gov/irm/part1/irm_01-035-006

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3 Comments
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Community Champion

Chart of Accounts

Fixed asset. And if you rent these it is a 27.5 year depreciation schedule.  If you usd them as an office it is 50 years, I believe

Highlighted
Level 2

Chart of Accounts

Is there a minimum dollar to enter it under Fixed Asset?

Highlighted
Community Champion

Chart of Accounts

Under prior to 2017 rules on equipment a $500 threshold was in place but this safe harbor deminimis rule was expanded to $2500 per invoice or line item.  Not this is for EQUIPMENT and does not apply to purchase of or repair of permanent buildings. 

 

Your tiny houses are permanent structures for habitation. Consult your CPA to be sure but no matter the price, it is my opinion that all capital type costs related to a structure are fixed assets requiring depreciation.

 

Certain agricultural structures are exempt. Corn bins, chicken coops, etc.  But "house" is in the name of what you bought, it's presumed use is for human habitation. If these were strictly for display at home shows that would be another thing, and maybe they could be written off as an expense instead.

 

https://www.schgroup.com/resource/blog-post/irs-makes-major-change-fixed-asset-expensing-rules-benef...

 

https://www.irs.gov/businesses/small-businesses-self-employed/tangible-property-final-regulations

 

https://www.irs.gov/irm/part1/irm_01-035-006

View solution in original post

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