own a 2 family house, FinAid consequences living there or not? Advice please.

[notrichenough]

<p>

I’m not down with the argument that the $500 fridge isn’t one of your assets.

That’s certainly a reasonable viewpoint, although at the very least the minute it leaves the showroom floor it’s value probably drops by half.

Nonetheless, my response to your original statement:

Depreciation is the big one as this is considered a “phantom” expense in that it doesn’t represent money you actually spent.

is still that some depreciation items do represent money you actually spent.

The question isn’t “did I spend money on the item I am depreciating”, of course you have to spend money. The issue is, what does depreciation really represent?</p>

<p>Depreciation isn’t an operating expense, like paying for insurance or an electric bill or a plumbing repair. You don’t write a check every year to “East-West Depreciation Company”. After year one, you are not shelling out more money for that asset, but you are still getting a deduction. Hence the term “phantom expense”.</p>

<p>And for the actual building, depreciation doesn’t really represent the asset being “used up”, the building will not have zero value after being fully depreciated. It most likely will be worth more than you paid for it.</p>

<p>

But you wouldn’t count up all the appliances, furniture, carpets, etc. that you are depreciating, and then subtract the value of them from the value of the apartments they are being used in on the argument that those items are your personal property, would you? I’m not really getting that.

I think you could make a case to do this, at least for those items that are not permanently installed. I still maintain that in most cases replacing an appliance or carpeting an apartment does not change the value of the property in a measurable way. So there is no need IMO.</p>

<p>If you feel like you should increase the value you report by $500 after putting a new fridge in, go ahead. But personally I wouldn’t.</p>