Can You Deduct Furniture For Rental Property? + FAQs

Yes, you can deduct furniture for a rental property as a tax write-off in most cases.

According to a 2024 National Association of Realtors survey, over 45% of individual landlords misreport or overlook furniture deductions, risking IRS audits and costly tax overpayments. This guide will make sure you’re not one of them by explaining exactly how to deduct rental furniture under federal and state rules, with examples, strategies, and pitfalls to avoid.

What you’ll learn in this guide:

🏷️ Which furniture purchases you can write off—and which you can’t
💸 How to deduct furniture fast (Section 179 & bonus) vs. depreciating over years
📊 Real-world examples for Airbnb hosts, long-term landlords, and even office rentals
🗺️ State-specific tax twists that could affect your furniture write-off
🚩 Common mistakes that trigger IRS red flags—and how to avoid them

Yes, You Can Deduct Furniture—But Only If You Follow IRS Rules

Landlords can deduct the cost of furniture used in a rental property, but only if certain conditions are met. The IRS requires that any expense you deduct be “ordinary and necessary” for your rental business. In plain English, that means the furniture should be typical for a rental and directly related to earning rental income. A couch, bed, or dining table in a furnished rental unit usually qualifies, since it’s part of providing a livable space to tenants. However, extravagant pieces not related to the rental (or personal furniture from your own home) would not qualify. Always ensure the item is used exclusively for the rental property – if you or anyone else uses it personally, that deduction won’t fly with the IRS.

Another key rule: you generally cannot deduct the full cost of high-price furniture all at once unless you use special methods. For example, if you buy a $5,000 set of furniture for your rental, you can’t simply subtract $5,000 from your rental income on your taxes in the year of purchase (unless certain exceptions apply). Why? Because the IRS considers furniture a capital asset – something with a useful life beyond one year. The cost must usually be recovered over time through depreciation (more on this shortly). In other words, you get to deduct a portion of the cost each year, rather than the entire amount in year one.

Example: You furnish a rental living room with a sofa, chairs, and tables costing $3,000 total. Without any special provisions, you might deduct roughly $600 per year over a 5-year period as depreciation. If you tried to deduct all $3,000 at once without using an allowed method, the IRS would likely deny the excess deduction and could flag your return for an audit. The tax law is structured this way to match the expense with the period the furniture is used to produce income.

The good news is there are legal ways to write off most or even all of the furniture cost in the first year if you plan correctly. Special tax provisions like Section 179 expensing and bonus depreciation can override the normal rules – allowing immediate or accelerated deductions. We’ll dive into those soon. First, let’s break down the basics of what you can deduct, where to claim it, how the deduction works, and why these tax breaks exist.

What rental furniture costs are deductible?

Virtually any furniture or furnishing used in a rental property is deductible in some form, as long as it’s ordinary for that type of rental and used for the business. Deductible items typically include: beds, mattresses, sofas, chairs, dining tables, dressers, coffee tables, lamps, curtains, rugs, and other household furniture in a residential rental unit. Appliances like a refrigerator, stove, or washer/dryer are also considered personal property for the rental and fall in a similar category (they’re depreciable assets, not part of the building itself). In a short-term rental (e.g. an Airbnb or vacation rental), things like televisions, wall art, and even dishes or small appliances provided to guests can be deducted as business assets.

On the other hand, structural components or permanent fixtures of the property are not considered furniture and are handled differently. For example, built-in cabinets, sinks, or a furnace are part of the building – you can still deduct their cost, but as part of the property’s improvement (usually over 27.5 years for residential real estate). Don’t confuse free-standing furniture with fixtures attached to the building. Only the movable furnishings qualify as furniture for the purpose of these faster write-offs. Also, any item that is purely decorative but not reasonably helpful in renting the place (say, a pricey piece of art you hang primarily for personal enjoyment when you stay there) could be challenged as not a necessary rental expense.

In summary, deductible furniture = things like couches, beds, tables, chairs, appliances, carpets, and curtains that you provide for tenant use. Not deductible as furniture = structural improvements (part of the building) or any personal-use items. If you’re ever unsure if something counts as furniture or an improvement, consider this rule of thumb: if you could pick it up and take it with you when you move, it’s likely personal property (furniture) and depreciable over a shorter term. If it’s attached to the building or would damage the building by removing it, it’s probably a real property improvement and subject to longer depreciation.

Where do you claim furniture deductions on your taxes?

Rental furniture deductions are typically claimed on your Schedule E (Supplemental Income and Loss) as part of your rental property income and expenses. However, because furniture is a capital item, you generally do not simply list the purchase price as a direct expense on Schedule E. Instead, you must use Form 4562 (Depreciation and Amortization) to report the asset and claim depreciation or special expensing for it. In practice, you will list the furniture purchase on Form 4562 in the year you start using it in the rental, and that form calculates the deductible amount for the year. The result flows to your Schedule E (as a depreciation expense or Section 179 expense deduction).

If you qualify to deduct the entire cost in one year (via Section 179 or bonus depreciation), it will still be recorded through Form 4562 and then shown on Schedule E as an expense. It’s important to keep records of each furniture item’s purchase date and cost because you’ll need that information to fill out the depreciation schedule.

One caveat: if your rental activity is considered a business (active trade or business) – for example, you run a short-term rental with substantial services, or you qualify as a real estate professional – you might report income and expenses on Schedule C instead of E. In that case, furniture would be handled similarly (through Form 4562 for depreciation/expensing), but it would offset your business income on Schedule C. For most typical landlords (long-term residential rentals), Schedule E is the place for rental furniture deductions.

Always double-check state tax forms as well. You may need to make adjustments on your state tax return for depreciation differences (more on that later). But for federal filing, remember: Schedule E + Form 4562 are your friends when deducting rental furniture.

How can you deduct furniture – immediately or over time?

There are two primary ways to deduct the cost of rental furniture:

Immediately, in the first year – using special provisions like Section 179 or bonus depreciation, or under certain safe harbor rules. This lets you take a big upfront deduction.
Over time, through depreciation – spreading the cost over the furniture’s useful life (several years), with a portion deducted each year.

Under the default tax rules, you must depreciate furniture over multiple years because it’s considered a long-term asset. For residential rental property, the IRS assigns most furniture and appliances a 5-year recovery period under MACRS (Modified Accelerated Cost Recovery System). That means you write off the cost gradually, typically using an accelerated method that gives you more deduction in the early years than later. In contrast, office furniture or furniture in a commercial setting often has a 7-year depreciation life. We’ll detail the mechanics of depreciation shortly.

However, if you want to deduct the entire cost in one year, you can do so if you meet the requirements of Section 179 expensing or if the asset qualifies for bonus depreciation. Section 179 allows a full write-off of qualifying property (including most rental furniture) up to a large limit, but only if your rental activity is profit-motivated and active enough to count as a business. Bonus depreciation, on the other hand, allows a percentage of the cost to be deducted immediately for all qualifying assets, regardless of business profit, and is not limited to business income – it’s automatic if you opt to use it.

In short, how you deduct furniture comes down to either taking it all at once (fast deduction) or taking it bit by bit (slow deduction). You have to follow the IRS’s rules for either route. We’ll guide you through choosing the best method for your situation in the upcoming sections. The key point to know now is: don’t just deduct the full cost without using an approved method. Either depreciate it or elect a special immediate expense option. Doing it the proper way keeps your deduction safe from IRS disallowance.

Why does the IRS allow furniture deductions at all?

It might seem too good to be true that you can buy a sofa for your rental and have the government effectively subsidize part of it via tax savings. But there’s sound reasoning behind it. The IRS allows deductions for furniture (and other assets) because these purchases are ordinary expenses of running a rental business and they lose value over time. A couch in a rental won’t last forever – tenants use it, it wears out, and eventually you’ll replace it. Tax depreciation acknowledges this reality by letting you recover the cost gradually as the item “uses up” its useful life.

From a policy standpoint, furniture deductions (especially accelerated ones like Section 179) exist to encourage investment in businesses and property improvements. The government wants landlords and property owners to invest in quality furnishings, maintain their properties, and provide good housing. Allowing immediate expensing (like Section 179) is a way to stimulate economic activity – if you know you can write off the entire cost of new furniture this year, you might be more likely to buy that new dining set for your rental now rather than later. This helps industries (furniture manufacturers, retailers) and also helps you as a landlord keep your property attractive to renters.

There’s also a matching principle in tax law: expenses should be matched to the income they help produce. Furniture is part of producing rental income each year, so you get to deduct that cost against that income, either all at once or over the years of benefit. In summary, the “why” is: to accurately reflect business costs and to incentivize investment. As long as you play by the rules (ensuring the expenses truly relate to your rental activity), the tax code is on your side in allowing these deductions.

Fast vs. Slow Write-Offs: Section 179, Bonus Depreciation, and Regular Depreciation

Now that we’ve covered the basics, let’s explore the different methods to deduct furniture and how each works. Depending on your situation, you might choose to deduct the cost immediately or spread it out. The main methods are:

Section 179 Expensing – Allows an immediate deduction of the full cost (if you and the property qualify).
Bonus Depreciation – Allows a large percentage upfront deduction automatically.
MACRS Depreciation (Straight-line or Accelerated) – The default method, spreading cost over 5 or 7 years.

We’ll also touch on the De Minimis Safe Harbor for small purchases, which can simplify things.

Section 179: Deduct the Full Cost in Year One (if You Qualify)

Section 179 is a powerful tax provision that lets businesses deduct the entire cost of qualifying assets in the year of purchase, rather than depreciating over time. The great news for landlords: Since 2018, most furniture and appliances used in residential rentals qualify for Section 179 expensing. (Previously, assets used in a rental “lodging” business were excluded, but tax law changes removed that restriction.)

Here’s how Section 179 works in a nutshell for your rental furniture:

Qualifying property: Tangible personal property like furniture, equipment, and appliances qualify. The furniture must be used over 50% for business purposes, which in a pure rental property scenario is usually 100%. So your rental couches, beds, etc. are eligible.

Business income requirement: You must have enough taxable income from your trade or business to absorb the Section 179 deduction. Section 179 cannot create or increase a tax loss from business activities. For example, if your rental operation (considered as a business) made $0 or a loss, you can’t use Section 179 to deduct $10,000 of furniture – you’d be limited by zero income. The unused amount would carry forward to future years.

Active business status: Technically, Section 179 is available only to assets used in an “active trade or business.” Many landlords do qualify, especially if you work regularly on your rentals. Owning even a single rental can count as a trade or business if your involvement is continuous and profit-driven. If you’re a very passive landlord (for instance, you hire a property manager and spend almost no time), the IRS might view your rental as an investment rather than a business, which could jeopardize Section 179 eligibility. In practice, it’s rare for moderate rental activity to be disqualified – courts have allowed even single-property landlords to claim business deductions if they put in regular effort.

Dollar limits: Section 179 has annual limits. As of 2025, you can deduct up to about $1.25 million in total across all assets, which is far more than most small landlords will ever need for furniture! (This limit is for all Section 179 expenses combined, and it starts phasing out if you place more than about $3.1 million of assets in service in one year.) So, for typical rental owners, the dollar limit isn’t a problem – you’re unlikely to buy over a million in furniture. But be aware of it if you have extensive property investments or multiple businesses.

How to elect: You elect Section 179 by filling out Part I of Form 4562 with the details of the asset and the amount you want to expense. You can choose to 179 some assets and not others, as you see fit, up to your limit. Any portion not expensed can still be depreciated normally.

Example: You purchase $3,000 worth of new furniture (a bed set and sofa) for a rental house in 2025. If your rental activity qualifies as a business and you have at least $3,000 of net rental income (or other active business income) for the year, you could elect to expense the full $3,000 under Section 179. This gives you a $3,000 deduction in 2025, reducing your taxable rental income dollar for dollar. Compare that to not using 179: you’d depreciate the $3,000 over 5 years, maybe about $600 per year. The difference is dramatic – Section 179 yields a big upfront tax break.

Keep in mind: Section 179 is all-or-nothing per asset. You either expense an asset fully or depreciate it (you can also choose to 179 a portion of the cost and depreciate the rest, but typically if you qualify, you take the whole thing). If your rental shows a loss before the Section 179, part of your deduction might get carried forward due to the income limitation. That carryforward can be used in future years when you have rental profit.

Section 179 is especially beneficial if you’re having a good income year or if you’re setting up a new rental with lots of startup costs. It can wipe out your tax on rental profits. Just be sure your rental activity is sufficiently business-like (regular and continuous). Document your involvement—hours spent, tasks done—just in case you need to prove to the IRS that you are indeed running a rental business. And remember, some states do not allow the full Section 179 write-off (more on state differences later), so you might have to add some amount back on your state return even if you take it federally.

Bonus Depreciation: An Automatic First-Year Boost

Bonus depreciation is another tool for accelerating deductions on furniture. Unlike Section 179, you don’t need a special election or business income to take bonus depreciation – it’s essentially built into the tax code as the default for qualifying assets, unless you opt out.

As of the current law, bonus depreciation allows you to deduct a certain percentage of the asset’s cost upfront in the first year, and then depreciate the remainder over the normal schedule. In recent years (2018-2022), bonus depreciation was a whopping 100% – meaning you could deduct the entire cost of most furniture immediately, no matter what. This was effectively an instant write-off for everyone, even passive investors. However, bonus depreciation is phasing down now:

For assets placed in service in 2023, bonus = 80% of the cost.
For 2024, bonus = 60%.
For 2025, bonus = 40%.
For 2026, bonus = 20%, and after that it’s scheduled to go away (0%), unless Congress extends or changes it.

So in 2025, if you buy a piece of furniture for your rental, you can generally deduct 40% of its cost as bonus depreciation immediately, and the remaining 60% gets depreciated over the asset’s life.

Important points about bonus depreciation:

No income or business use requirement: Even if your rental is just an investment and not an active business, you can take bonus depreciation on its furniture. Also, bonus can create a net loss (unlike Section 179’s limitation). Of course, using a loss is subject to the passive loss rules, meaning you might carry it forward if you can’t use it in the current year – but the deduction itself is not disallowed; it just might be suspended for use later.

Automatic application: If you qualify, you don’t have to do anything special besides calculate it on Form 4562. All new depreciable property with a recovery period of 20 years or less (which includes furniture, appliances, equipment) is eligible for bonus. If for some reason you don’t want to take bonus depreciation (e.g., you prefer to spread out deductions), you must elect out of it asset class by asset class.

Used property now qualifies: Initially, bonus depreciation was only for new items. Current law (after 2017) allows bonus on used property as well, as long as it’s new to you and not acquired from a related party. So if you picked up some second-hand furniture for your rental from a store or unrelated individual, it still qualifies for bonus depreciation.

Stacking with Section 179: You can combine methods. Typically, if you want, you could use Section 179 on some items (to fully expense them) and then apply bonus depreciation to any remaining qualifying assets or amounts. For example, if some costs exceed the Section 179 limit or you choose not to 179 an asset, you’d then automatically get bonus on it at 40% (2025). In practice, when bonus was 100%, Section 179 became less critical; but as bonus rates drop, Section 179 can cover what bonus no longer does.

Example: You purchase $10,000 of furniture for a new rental in late 2024. If you opt for bonus depreciation (60% in 2024), you can deduct $6,000 immediately as bonus. The remaining $4,000 will be depreciated over 5 years (for residential rental furniture). In 2025, bonus falls to 40%. If you buy another $10,000 of furniture in early 2025, you’d get a $4,000 first-year bonus deduction, with $6,000 left to depreciate.

If you qualify for Section 179, you might decide to use it in 2025 to deduct the entire $10,000 instead of just $4,000 via bonus. That’s a strategic choice – section 179 could give you the full immediate benefit that year. If Section 179 isn’t an option (say your rental isn’t treated as a business or you have no profit), you’ll take the 40% bonus automatically.

One thing to watch: state conformity. A number of states do not allow bonus depreciation at all. They will require you to add back the bonus amount and depreciate the furniture on their own schedule. So even if you get a huge deduction federally, your state taxable income might not get the same break. We’ll discuss specific states soon.

Regular MACRS Depreciation: The Default Method

If you don’t (or can’t) use Section 179 or bonus depreciation, you’ll deduct your furniture via MACRS depreciation. MACRS stands for Modified Accelerated Cost Recovery System – it’s the set of rules for depreciating assets for tax purposes.

Under MACRS, most tangible personal property like furniture is depreciated using an accelerated declining-balance method with a switch to straight-line, over a set number of years. Without getting too deep into the calculation mechanics, here’s what you need to know as a rental owner:

5-year vs 7-year life: As mentioned earlier, residential rental property furniture and appliances fall under a 5-year recovery period (under GDS, the General Depreciation System). This includes items used in a dwelling for rental. If you have office furniture or equipment used outside the rental unit (say in a home office for managing your rentals), those are typically 7-year assets. Also, if you furnished a commercial rental property (like office space), that furniture would use 7-year depreciation by default.

Convention: MACRS uses a half-year convention in most cases for personal property. This means in the first year you only get roughly a half-year’s worth of depreciation, regardless of when you actually bought it during the year (unless purchases in the last quarter are disproportionately large, which triggers a mid-quarter convention rule). The half-year convention is built in – essentially you get about 10% of the cost deducted in year 1 on a 5-year asset, then around 20%, 20%, 20%, 20%, and the remainder in year 6. This accelerates some deduction into earlier years but also spreads it out.

Straight-line option: Residential rental property itself (the building) must be depreciated straight-line over 27.5 years. For furniture, however, you are allowed accelerated depreciation (200% declining balance). You could elect straight-line for personal property if you prefer even deductions each year, but most people don’t because accelerated yields more upfront. In any case, the entire cost will be written off by the end of the recovery period.

Salvage value: Tax depreciation assumes zero salvage value (you depreciate the full cost). So you don’t need to estimate any residual value for the furniture; you take it down to zero over the life.

Placed in service date: You start depreciating when the furniture is placed in service (i.e., ready to use in the rental). If you buy furniture but your property isn’t rented or available for rent yet, you can’t start depreciation until it is. So timing matters – if you furnish a property in December but don’t have it listed or ready to rent until January, you actually should wait and start depreciation in January of the next year.

Using our earlier example, if you have a $3,000 couch and depreciate it over 5 years with MACRS, your deduction might look roughly like: $600 in the first year, $1,150 in years 2-5 each, and about $350 in the sixth year (half-year in the final part). The total equals $3,000 by the end. The accelerated method front-loads it a bit (more in years 2-5). Straight-line would have been $600 each year for 5 years (with half-year spread making it 6 calendar years to finish).

While depreciation requires a bit more record-keeping (you must track the asset and continue claiming it each year), it’s straightforward once set up. Many tax software programs handle the calculation once you input cost and date.

The downside of regular depreciation is the slower tax benefit. Some landlords actually forget to depreciate or neglect to include it, which is a mistake – not only do you lose annual deductions, but the IRS will still charge you depreciation recapture when you sell as if you had taken it! (Meaning, you’re expected to depreciate, and if you don’t, the IRS will treat it as if you did when calculating gain on sale. So always take your depreciation.)

De Minimis Safe Harbor: Expense Small Items Easily

What if you buy lower-cost furniture or decor items? Not every purchase is in the thousands of dollars. The IRS provides a useful shortcut called the de minimis safe harbor election, which can simplify your tax life. If the cost of an item (or invoice of multiple items) is below a certain threshold, you can choose to expense it immediately instead of capitalizing and depreciating it, without needing Section 179 or bonus.

The threshold is generally $2,500 per item or invoice (for taxpayers without an applicable financial statement). Most small landlords fall in this category. That means if each piece of furniture is $2,500 or less, you can just deduct it as a repair/maintenance expense in the year purchased under this safe harbor.

To use this, you should make the annual election by including a statement with your tax return (a simple statement citing Treas. Reg. §1.263(a)-1(f) de minimis safe harbor). Many tax software programs have an option to indicate you’re using the de minimis safe harbor.

You also need to consistently treat such purchases as expenses in your own accounting. Essentially, if your bookkeeping policy is to expense items under $2,500, the IRS will respect that on the return with the election.

This safe harbor is per item or per invoice. For example, if you buy a dining table and 4 chairs for $2,400 as a set on one invoice, that’s under $2,500 – you can expense the whole thing immediately without worrying about depreciation. But if you bought a set of appliances for $5,000 on one invoice, you can’t chop it up into per-appliance cost unless they’re separately stated; the invoice total exceeds $2,500, so normally you’d have to capitalize (unless using 179 or bonus).

Items under $200: There’s also a rule that materials and supplies under $200 (or with short useful life) can be expensed outright even without the formal safe harbor. So inexpensive household items, small fixtures, or minor furniture pieces under $200 are generally fine to deduct as supplies or miscellaneous expenses.

Using the de minimis safe harbor is a great way to avoid over-complicating your tax return with tons of minor assets. Many landlords furnishing an apartment will have numerous items – lamps for $150, coffee table for $300, etc. Those can be expensed immediately under this rule, while larger items like a $1,500 couch can also be expensed since it’s under $2,500. Essentially, this safe harbor might allow you to deduct most if not all of your rental furnishings immediately without even needing Section 179 or bonus, as long as each item wasn’t too pricey.

Example: You furnish a bedroom with a bed frame ($800), mattress ($1,200), two nightstands ($300 total), and a dresser ($600). Each item’s cost is below $2,500. If you elect the de minimis safe harbor, you can deduct the entire ~$2,900 at once as a rental expense. No depreciation schedules needed for those items. Meanwhile, if you also bought an $3,000 high-end entertainment center for the living room on a separate invoice, that one item exceeds $2,500, so you’d still have to capitalize and depreciate (or use 179/bonus on it).

Make sure to keep receipts and document the cost of each item, as the IRS could ask to verify the price. If sales tax and delivery fees are on the invoice, include those in the total item cost when considering the threshold. If something is just over the limit (say $2,600), you cannot use the safe harbor for that item – but sometimes splitting purchases (buying pieces separately) can legitimately keep items under $2,500 each.

In summary, the de minimis safe harbor is your friend for small furniture and household items. It allows you to treat them as regular expenses, simplifying your return. Just remember to attach the election statement with your tax filing each year you use it (it’s an easy one-time per year statement, not per item).

Having covered the methods available, let’s compare and see which strategy might be best for you, and then look at how states differ in these rules.

Section 179 vs. Bonus vs. Depreciation: Which Strategy Works Best?

By now you’re aware of the three main approaches to deducting your furniture costs. Choosing the right one can maximize your tax benefit and align with your financial goals. Here’s a quick comparison of these methods and when to use each:

Deduction Method	Best Used When…
Section 179 Expensing	You have sufficient rental profit (or other business income) this year and want to eliminate taxable income by writing off furniture immediately. Great for active landlords who qualify as a business and plan large purchases. (Example: You earned $15,000 net rental income and bought $10,000 furniture – Section 179 can wipe out that income tax-free.)
Bonus Depreciation	You’re placing a lot of assets in service and/or don’t mind creating a loss. Bonus applies automatically even if income is low. Ideal for a new property setup where upfront costs are high. Also useful if Section 179 is limited or if you want some immediate deduction but perhaps not 100%. (Example: You bought $20,000 of furniture but have a small profit – bonus at 60% could give a $12,000 deduction now, with the rest later.)
Straight-Line Depreciation (5 or 7-year)	You prefer steady, predictable deductions over time or you don’t qualify for accelerated methods. Also safer if you expect to be in a higher tax bracket in future years (spreading the deduction might save more tax overall later). Often used by conservative landlords or those with long-term hold strategies who want to preserve deductions for future income. (Example: You plan to hold the property indefinitely and already have low taxable income this year – you might just depreciate normally to use deductions in future years when your income is higher.)

In essence, Section 179 is the most aggressive and requires an active business with profits; bonus depreciation is automatically available and can create losses (subject to passive loss limits), and regular depreciation is the fallback that always applies if you don’t use the other two. There’s also nothing wrong with mixing approaches: you might Section 179 some big-ticket items, take bonus on others, and depreciate the rest.

One factor to consider is the impact on your taxable income and planning:

Expensing everything now (via 179/bonus) will lower your current taxable income significantly. If you’re in a high tax bracket this year or just want immediate cash-flow relief, this is great. However, you won’t have those depreciation deductions in future years – meaning your taxable rental income in later years will be higher without those write-offs. Some landlords actually like to preserve some depreciation for future years to offset ongoing income.

Using accelerated deductions can also potentially trigger or increase a tax loss on your rental. A rental loss is not directly bad – it can offset other passive income, or up to $25k of other income if you actively participate and your income is under certain thresholds, or it can carry forward. But unused losses tie up deductions until you have rental income or sell the property. If you can’t currently benefit from an extra $10k deduction (because it just becomes a suspended passive loss due to income limits), you might not rush to create one unnecessarily.

Recapture on sale: This is a longer-term consideration. Any depreciation you claim (or are deemed to claim) will be “recaptured” as taxable income if you sell the property at a gain. Furniture is Section 1245 property, which means all the depreciation taken is recaptured up to the asset’s cost. If you expensed the furniture fully and later sell or dispose of it for some value, that can result in ordinary income recapture. In practice, used furniture often has little value, but it’s worth noting. Depreciation recapture for personal property is taxed at ordinary income rates (up to 37%), not the special 25% rate that applies to real estate depreciation. This doesn’t mean you shouldn’t depreciate – you absolutely should take the benefit – but be aware that if you manage to sell furniture or include it in a property sale, the tax will account for those prior deductions. Most landlords essentially get the deduction upfront and then pay some back later at sale (unless the item is scrapped or given away for no value, in which case you got a free deduction). This is just the nature of depreciation.

From a tax planning perspective, here are some tips:

If you expect your income to rise in coming years (say you’ll be in a higher bracket or losing other deductions), you might choose to slow down on immediate expensing and let depreciation offset that future higher income.

If you have a big income year (maybe you sold another property for a gain, or you have a lot of other taxable income), that’s a prime time to use Section 179 or bonus on any new furniture purchases to cut your tax bill.

Landlords aiming for the Qualified Business Income (QBI) deduction for rental (the 20% pass-through deduction) need the rental to be a trade or business. Using Section 179 doesn’t directly affect QBI (depreciation or 179 both reduce the qualified income similarly), but ensuring your rental qualifies as a business is key for both QBI and Section 179. Document hours and involvement if needed.

Finally, remember that once furniture is fully depreciated or expensed, it no longer gives you tax deductions in subsequent years. Some experienced investors plan improvements or replacements periodically to keep some depreciation flowing. For example, they might refresh furniture every 5-7 years, partly for maintaining property appeal and partly to generate new depreciation deductions. This doesn’t mean buy things just for a tax break, but if the furniture’s lifecycle aligns with tax advantages, it’s a win-win.

In the next section, we’ll see how these federal rules collide with state tax laws. After that, we’ll summarize the pros and cons of deducting furniture costs up front, and highlight mistakes to avoid.

State-by-State Nuances: How Your State Can Change the Deduction

Federal tax law is only half the story. State income tax rules for depreciating or expensing rental furniture can differ significantly. Some states conform to the IRS rules entirely, while others say, “Not so fast!” As a landlord, you need to be mindful of your state’s treatment to avoid surprises when filing state taxes.

Broadly, states fall into a few categories regarding Section 179 and bonus depreciation:

Full Conformity: Many states adopt the federal Internal Revenue Code as is, meaning they allow the same Section 179 expensing limits and bonus depreciation as the IRS. In these states, you can deduct furniture on your state return just like you do federally. This simplifies things – your state taxable rental income will match federal.

Partial/Modified Conformity: Some states conform to one provision but not the other, or they set their own limits. For instance, a state might allow Section 179 expensing but disallow bonus depreciation. Or they might allow bonus but with a smaller percentage. These states often require an “add-back” on your state return for any depreciation you took in excess of what the state allows, and then you recover that difference over several years.

No Conformity (Static Code): A few states have their tax law fixed to an older version of the Internal Revenue Code. States like New Jersey, for example, peg to the code as of a certain date (often early 2000s), which means they never adopted the newer Section 179 increases or bonus rules from recent federal changes. In those states, you effectively have to compute depreciation as if those federal provisions didn’t exist and make adjustments.

No state income tax: If you’re in a state without income tax (e.g., Florida, Texas, Tennessee for individual income, etc.), you don’t have to worry about state conformity for personal taxes. (Do note, a few no-income-tax states might have other business taxes, but most small landlords are only concerned with income tax.)

Let’s look at a few notable examples:

State	Treatment of Furniture Deductions
California	Does NOT conform to federal bonus depreciation and limits Section 179. California caps Section 179 deductions at $25,000 per year (with a lower phase-out threshold than federal) and does not allow bonus depreciation at all. So if you expensed furniture fully or took bonus on your federal return, you must add that amount back to income on your California return and then depreciate the furniture the regular way for CA purposes. Essentially, California makes you spread the deduction out even if you got it upfront federally. Be prepared for dual depreciation schedules – one for IRS, one for CA.
New York	Partial conformity. New York generally follows the federal Section 179 rules (so it allows the higher expensing limits and you can match your federal Section 179 deduction on your NY return). However, New York disallows federal bonus depreciation. If you claimed bonus, you’ll need to add back the bonus amount and then deduct it over the following years (New York typically allows you to deduct the disallowed bonus in equal parts over the next few years). In practice, that means if you bonus depreciated a $5,000 furniture set on the federal return (say 60% = $3,000 bonus in 2024), New York will make you add back $3,000 this year, but then you can deduct that $3,000 divided over the next 3 years (for example) on NY returns. The exact mechanism can vary, but expect a slower write-off in NY.
Georgia	Full conformity. Georgia (along with many other states like Arizona, Colorado, etc.) has adopted the federal rules from the Tax Cuts and Jobs Act. It allows the same Section 179 maximum as federal and also honors federal bonus depreciation percentages. This means your state tax for these states will mirror your federal: if you deducted furniture immediately under Section 179 federally, Georgia does the same. If you took 60% bonus, Georgia takes 60% bonus. Conformity like this simplifies your life – one depreciation schedule works for both. Always verify the latest, but as of now, these conforming states make it easy.
New Jersey	Old-school limits (no conformity to recent changes). New Jersey’s tax code is tied to the federal code as of 2002. That means NJ never adopted the big Section 179 increases or bonus depreciation from later laws. On a New Jersey return, you’re basically limited to a $25,000 Section 179 deduction (and phased out for large purchases) similar to old federal rules, and bonus depreciation is completely disallowed. If you fully expensed furniture on your federal, get ready to recalculate for NJ – you’ll likely have to report higher income in NJ by adding back the expensing, and then use NJ’s form to depreciate those assets over the standard life. NJ, like CA, will require you to maintain a separate depreciation schedule.
Texas / Florida	No personal income tax. Lucky you – for individual landlords in these states, the battle is only at the federal level. There’s no state income tax return to adjust. (If you operate via an entity, just be mindful of any franchise or gross receipts taxes, but those usually don’t require tracking depreciation differences like an income tax would.) Essentially, in no-income-tax states, you get to enjoy the federal deduction without any state catch-up.

These are just examples. Many other states have their own quirks. Pennsylvania, for instance, didn’t allow bonus depreciation until very recently and only started allowing the higher Section 179 from 2023 onward. Ohio requires you to add back a portion of 179 and then deduct it over several years. Massachusetts doesn’t allow Section 179 on personal income tax at all (for most situations) even though it has an income tax – so Mass landlords depreciate everything even if federally expensed. It’s critical to check your state’s Department of Revenue guidelines or talk to a CPA about your state’s rules.

Practical tip: If your state disallows bonus or limits 179, you will need to keep two sets of records for your furniture: one for federal depreciation (showing perhaps a zero remaining basis after expensing) and one for state (showing the asset being depreciated normally). This also means your state taxable income will be higher than federal in the expensing year, but then lower in later years when federal has no depreciation left and state is still giving you some. Plan for that difference in cash flow. Tax software often has worksheets for state depreciation adjustments.

Bottom line: Always adjust your strategy knowing your state’s stance. If you’re in a non-conformity state, you might decide it’s still worth taking the full federal deduction upfront for the immediate savings, and just accept that you’ll have smaller state deductions in future years. In other cases, if the state benefit is lost, you might not rush to elect 179 federally (though most people still do because federal tax rates are often higher than state, so the federal benefit outweighs deferring some state deduction).

Now that we’ve navigated federal and state rules, let’s summarize the pros and cons of deducting furniture expenses, and then we’ll move on to common mistakes to ensure you do things right.

Pros and Cons of Expensing Rental Furniture Upfront

Is it better to deduct your furniture all at once or over time? It often sounds like “sooner is better,” but there are pros and cons to each approach. Here’s a quick look at the advantages and disadvantages of taking immediate furniture write-offs (via Section 179 or bonus) versus the slow-and-steady depreciation route:

Pros of Immediate Expensing	Cons of Immediate Expensing
Big tax savings now: An upfront deduction reduces your taxable income in the current year, putting cash in your pocket sooner. This can be a huge help for cash flow, especially after spending money to furnish a property.	Potential for unused losses: If expensing creates a large loss, you might not benefit right away due to passive loss limits. In that case the deduction is suspended until you have future rental income or sell the property, delaying the benefit.
Simplified accounting: Small purchases can be expensed and forgotten. You don’t have to track the asset over years. This is especially true with the de minimis safe harbor for items under $2,500 – one-and-done, no depreciation schedules.	State tax add-backs: As discussed, some states won’t allow the full immediate deduction. You’ll have to maintain separate records and effectively defer the deduction for state purposes, which adds complexity.
Maximizes current-year ROI: By reducing taxes now, your return on investment for the property in its early years improves. You essentially get part of your furniture cost subsidized at tax time immediately. This can soften the blow of setup costs for a new rental.	IRS scrutiny if misused: Large first-year deductions can draw IRS attention, especially if the expense seems out of line with the rental income or if there’s any question about personal use. Expensing a lot of furniture in a year your rental wasn’t even occupied much might raise eyebrows. Proper documentation is key to avoid audits.
Flexibility with tax planning: You can strategically use Section 179 in high-income years to knock down your tax bill. If you know you need the deduction this year more than future years (e.g., to keep yourself in a lower tax bracket), expensing gives you that control.	No deductions later: Once an asset is fully expensed, you have no further write-offs from it in subsequent years. Your rental income in those later years will get less shelter from expenses, potentially raising your taxable income then. You need to be prepared for higher taxable profits down the road (though of course you enjoyed the benefit earlier).
Encourages reinvestment: The ability to write off costs can encourage you to keep your rental updated with new furniture when needed, improving property quality. You won’t be as hesitant to replace a worn-out couch if you know you can deduct it immediately.	Record-keeping can still be tedious: If you have many items expensed through Section 179 or bonus, you must still keep records of those assets (for recapture and verification). And if you mix methods (expense some, depreciate others), it adds to bookkeeping complexity. Each approach isn’t hard on its own, but managing them together requires attention.

For most landlords, the pros outweigh the cons of taking deductions sooner rather than later. Tax savings today are usually more valuable than tax savings spread over five years. However, you should consider your individual circumstances. For example, if you anticipate selling the property in a couple of years, expensing everything now means you’ll likely face depreciation recapture on sale (you’d pay tax on the furniture’s depreciated value at ordinary rates). If you instead depreciated slowly, the recapture would be somewhat less at sale because you took fewer deductions. That said, recapture tax is not a reason to avoid taking depreciation – generally you still come out ahead by taking deductions and paying recapture later (due to time value of money and possibly lower tax rates on recapture vs. ordinary income in some scenarios).

Another subtle consideration: Taking a large deduction now could reduce your QBI deduction eligibility if it significantly lowers your taxable income from the rental business. The QBI 20% deduction is based on qualified business income after expenses. However, unless your income is high enough to be phased out of QBI, this usually isn’t a big issue – a lower profit just means a slightly smaller QBI deduction, but you still come out ahead net because you deducted more in the first place.

In short, use the tools available (179, bonus, safe harbors) to your advantage, but do so knowingly:

If you want consistent write-offs and smoother taxable income, you might voluntarily avoid expensing everything at once.
If you want maximum cash tax savings now, go for the accelerated write-offs.

Either way, be organized. Keep a depreciation schedule for anything you don’t expense, and note which items were expensed under safe harbor or 179 (so you don’t mistakenly try to depreciate them again or lose track if asked to prove the deduction).

Next up, let’s cover some common mistakes landlords make when deducting furniture, so you can steer clear of trouble.

Common Mistakes to Avoid When Deducting Furniture

Navigating these tax rules can be tricky, and landlords sometimes slip up. Here are some frequent mistakes and pitfalls – make sure you avoid them:

Claiming personal furniture as a rental expense: This is a big no-no. If you purchase furniture that you also use personally, or you move your own household furniture into a rental temporarily, you generally cannot deduct its full cost. For example, if you rent out a spare room and put your old couch in there that guests sometimes use, you can’t write off the original cost of that couch (it wasn’t purchased exclusively for the rental). Only furniture used 100% for the rental business is deductible. A tax court case (Moss v. Commissioner, 1983) underscored that mixed-use assets won’t qualify for business write-off – the IRS will disallow deductions for items that are not strictly business-use.
- Avoid: Deduct only items bought for and used solely in the rental; if an item has dual use, don’t claim it (or only claim the business-use percentage, which is complex and often not worth it for furniture).

Not depreciating (or expensing) at all: Some landlords forget to claim depreciation on their furniture and other assets. This often happens with DIY tax preparers who aren’t aware of the requirement, or they mistakenly think if they didn’t claim it they can avoid paying recapture later. Wrong. The IRS assumes depreciation should be taken, and if you don’t take it, they still count it against you in the end. Failing to depreciate means you’re leaving money on the table every year and you’ll get hit with the tax as if you did depreciate.
- Avoid: Always either expense or depreciate your furniture. If you missed it in prior years, consult a tax professional – you might need to file a form (Change of Accounting Method) to catch up missed depreciation.

Expensing items over $2,500 without an election or qualification: Just because an item is “small” in your view doesn’t automatically mean you can expense it without using the proper channels. For instance, if you bought a $4,000 bedroom set and deduct it immediately as a repair/supplies expense, that’s incorrect (unless you used Section 179 or bonus depreciation formally). The IRS could reclassify that as an unallowed deduction in year one.
- Avoid: Use the de minimis safe harbor properly by keeping items under $2,500 or by grouping correctly. If over that, use Section 179 or bonus or depreciate – don’t just lump a capital item into “repairs” on Schedule E. Always file the safe harbor election statement when needed.

Misusing Section 179 (or forgetting limits): A couple mistakes happen here. One is trying to take Section 179 when your rental activity doesn’t qualify as a business or has no positive income – the deduction either gets disallowed or carried forward, which might surprise you. Another is exceeding the Section 179 limit (not common for most, but if you have a lot of assets across businesses, remember the cap).
- Avoid: Ensure you materially participate in your rental so it’s a trade/business if you plan to use 179. Don’t count on 179 to create a loss you can use (it can’t create a loss beyond passive allowance). Also, if you have multiple rentals or other businesses, track your total 179 taken to not exceed the annual maximum.

Ignoring state adjustments: We’ve emphasized it, but it’s worth repeating as a “mistake.” Many landlords or their tax preparers focus on the federal treatment and then forget to adjust on the state return. This can lead to errors like double deducting (taking bonus depreciation on a state return that disallows it, effectively deducting too much on state) or not deducting at all (failing to claim the allowed depreciation in subsequent years on the state return because it was already fully depreciated federally).
- Avoid: Learn your state’s rules and ensure each year’s state return accounts for the correct depreciation. If your software doesn’t do it automatically, you may have to manually input adjustments.

Lack of documentation: If you ever face an audit, the burden is on you to substantiate the deduction. Some landlords throw away receipts or don’t keep a fixed asset list. If the IRS comes knocking, you’ll need to show proof of purchase (invoice, bill, credit card statement) for that furniture and that it was placed in service for rental on a certain date. Also, documentation that the property was available for rent at that time (like a lease or listing) helps back the “placed in service” date. Avoid: Keep a folder (digital or physical) with receipts for every furniture purchase. Note on each receipt which property and room it’s for. Maintain a simple spreadsheet or list of assets with dates and costs. It’ll make tax filing and any potential audit much smoother.

Overcapitalizing or undercapitalizing incorrectly: Sometimes landlords get confused about what should be capitalized as an improvement to the property versus what’s separate personal property. For example, say you did a renovation and as part of that you installed a built-in bench or custom shelving. You might erroneously list these as 5-year property, when in fact if it’s attached to the building, it’s part of the building (27.5-year property). Conversely, someone might treat a removable item like a window A/C unit as part of the building’s HVAC (which would be wrong – a portable A/C is an appliance, depreciable over 5 years, not 27.5).
- Avoid: Classify assets properly. Furniture and appliances = personal property (5 or 7 years). Fixtures and improvements = real property (27.5 or 39 years). If unsure, ask a tax pro or refer to IRS classification tables.

Splitting invoices improperly to use the safe harbor: A subtle mistake is trying to game the $2,500 safe harbor by splitting a purchase into multiple invoices. For instance, you buy a $4,000 set of furniture but ask the seller to invoice $2,000 for half and $2,000 for the other half to get under the limit. If these clearly constitute one overall asset or a set that should be capitalized together, the IRS can collapse that and disallow the safe harbor.
- Avoid: Use the safe harbor legitimately. It’s fine to buy items separately and each under $2,500, but don’t artificially break one asset into pieces on paper just for the deduction. That could be seen as abusive if ever examined.

Assuming all improvements qualify as furniture deductions: Some landlords think any money spent inside the house is deductible in the same accelerated way. But repainting walls, replacing drywall, installing new carpeting – these things have their own rules (repairs vs improvements). Don’t confuse a new carpet (which actually is 5-year property) with, say, new hardwood flooring that’s glued down (which could be treated as a real property improvement).
- Avoid: Distinguish between furnishing the place and structural or maintenance work. They have different tax treatments. Furniture and decor = this article’s domain. Repairs or capital improvements to the property structure follow Section 263a rules (some may be expensed if just repairs, others capitalized if they better the property).

By steering clear of these pitfalls, you’ll preserve your deductions and stay in the IRS’s good graces. The theme across all mistakes is know the rules and keep good records. If you’re ever uncertain, it’s better to ask a qualified tax advisor than to guess – an incorrect deduction can cost you penalties and interest later if audited.

Next, we’ll define some key terms we’ve been throwing around, like depreciation, recapture, and others, to ensure you fully understand the concepts. Then we’ll wrap up with a quick FAQ section answering some common landlord questions.

Key Tax Terms Explained (Glossary)

Depreciation – A tax method to recover the cost of a long-term asset over its useful life. Instead of deducting the full cost in one year, you deduct portions each year. For rental furniture, depreciation usually spans 5 years. It’s essentially an allowance for wear and tear.

Capital Expense – A purchase that provides value for more than one year, which usually must be capitalized (added to assets) and depreciated. Furniture is a capital expense, as opposed to a current expense (like a repair or utility bill) which can be deducted immediately. Capital expenses increase your investment basis in the property or assets.

Section 179 – A tax code provision that lets businesses elect to deduct the full cost of certain assets in the year of purchase. It’s subject to limits and business income requirements. For landlords, Section 179 can apply to personal property (furniture, appliances, equipment) used in a rental business, allowing immediate expensing.

Bonus Depreciation – An additional first-year depreciation allowance for new assets (and used, under current law) with a class life of 20 years or less. It permits a percentage of the asset’s cost to be deducted upfront (100% in past years; phasing down currently). Bonus depreciation is automatic if you don’t opt out and can create net operating losses.

MACRS – Modified Accelerated Cost Recovery System. The standard depreciation system in U.S. tax code for assets placed in service after 1986. It includes predetermined recovery periods and methods. Under MACRS, furniture is 5-year property (7-year if not in a residential rental use), typically using 200% declining balance switching to straight-line.

Placed in Service – The moment an asset is ready and available for use in your business or income-producing activity. Depreciation starts at this point. For rental property assets, “placed in service” usually means when the property is available for rent or being rented and the asset is installed and ready to use. If you buy furniture and leave it in storage until the rental is listed, the clock starts when it’s actually set up in the rental that’s available to tenants.

Passive Activity – A business or trade in which the taxpayer does not materially participate. Rental real estate is generally considered a passive activity by default (with some exceptions). Passive activity losses (PALs) can only offset passive income, unless you qualify for certain exceptions (like the $25k allowance for active participation or being a real estate professional). This is important for deductions: If your furniture deduction contributes to a passive loss, you might not use it immediately unless you have other passive income or meet an exception.

Passive Loss Limits – Tax rules that limit the deduction of losses from passive activities. If your rental (passive by default) has a loss, you can typically deduct up to $25,000 against other income if you actively participate and your income is under $100k (phasing out by $150k). Otherwise, excess losses carry forward. So a huge furniture deduction could create a loss that gets carried forward instead of used now, depending on your income and participation. It’s not lost – it’s deferred.

Real Estate Professional – A tax status for someone who spends the majority of their working time and at least 750 hours a year in real estate trades or businesses (and meets other tests). If you qualify, your rental activities are not automatically passive – meaning losses (including those created by depreciation or expensing furniture) can offset non-passive income. This is an advanced area, but worth knowing if you have significant real estate holdings.

De Minimis Safe Harbor – A tax election allowing you to deduct small-dollar purchases as expenses instead of capitalizing them. Currently $2,500 per item (or per invoice) threshold for taxpayers without audited financials. It simplifies accounting by letting you expense things like low-cost furniture, equipment, or supplies immediately. It requires a consistent policy and an election statement each year.

Safe Harbor for Small Taxpayers – A different safe harbor unrelated to furniture directly, but for completeness: It allows qualifying small landlords to deduct certain repair and improvement expenses if they fall below a certain percentage of the property’s unadjusted basis (generally 2% or $10,000, whichever is less). It’s more about repairs/improvements than personal property, but furniture could sometimes fall under a maintenance safe harbor if, say, it’s part of a small project. Usually, though, you’d use de minimis for furniture.

Recapture (Depreciation Recapture) – The process of “recapturing” the tax benefit of depreciation when you dispose of an asset. For rental property assets, when you sell or dispose, the IRS figures you’ve gotten tax write-offs, so they want to tax that portion. For personal property like furniture, all depreciation taken is recaptured as ordinary income upon sale of the asset (or, if sold as part of the property, allocated portion). If you end up scrapping the furniture with no proceeds, there’s no recapture – you may actually get a loss deduction for any remaining basis (though often the basis is zero by then if fully depreciated or expensed). It’s crucial to remember: depreciation isn’t “free money” – it defers taxes, and some of it comes back as recapture, albeit you often still come out ahead due to time value and possibly lower rates if it were real estate (for personal property it’s ordinary anyway).

Structural Component – A part of the rental building that is integrated into the structure. Examples: walls, doors, windows, plumbing, wiring, furnaces, built-in cabinets. These are not separate personal property and typically have to be depreciated as part of the building (27.5-year for residential, 39-year for commercial). It’s a term to know so you don’t mistakenly count a structural element as furniture or equipment.

QBI Deduction (Qualified Business Income deduction) – A 20% tax deduction on pass-through business income introduced by the Tax Cuts and Jobs Act. Rental income can qualify if the rental is a trade or business and you have taxable income under certain limits (or meet other criteria like the safe harbor of 250 hours). If your rental furniture deduction (via depreciation or expensing) reduces your rental profit, it also reduces the amount eligible for QBI deduction (since QBI is calculated after expenses). Just an FYI: while great to reduce taxable income, remember it also reduces QBI proportionally. Still, a dollar of expense saves you more tax than it would have via QBI (since QBI is 20% of income, whereas an expense saves you tax on 100% of that dollar).

With these terms explained, you should feel more confident about the jargon and concepts involved in deducting furniture for a rental property. We’ve covered the rules, methods, examples, and traps. To finish off, let’s answer some frequently asked questions that landlords often have about furniture deductions.

FAQs: Quick Answers to Common Questions

Can I deduct furniture for my Airbnb?
Yes. If your short-term rental is run as a business (which it usually is if you actively host on Airbnb or similar platforms), the furniture and household items you buy for it are deductible. You can often expense them immediately using Section 179 or bonus depreciation because an Airbnb with regular hosting is considered an active trade or business.

Does furniture in a long-term rental qualify for deduction?
Yes. Furniture in a long-term residential rental is definitely deductible. However, since it’s used in a rental activity, you typically must depreciate it over several years rather than deduct the full cost at once. You can only write it all off in one year if you use special provisions like Section 179 (and your rental is a business with income) or bonus depreciation. Otherwise, plan on a 5-year depreciation for those items.

Can I deduct furniture for a room I rent in my home?
No. If you’re just renting out a room in your personal residence, you generally cannot deduct the cost of furniture in that room as a rental expense unless that space is used exclusively by the renter and qualifies as a separate dwelling unit for tax purposes. Even then, the deduction would be proportional. In most cases, furniture in a mixed personal/rental space is considered personal use and isn’t fully deductible. Only areas and items exclusively used for rental business can be written off.

Do I have to depreciate second-hand or used furniture?
Yes. Used furniture that you purchase for your rental must be depreciated (or expensed under 179/bonus if eligible) just like new furniture. The fact that it’s used doesn’t change the deduction method, aside from its cost likely being lower. If you converted furniture you already owned personally into rental use, you would start depreciating it at its fair market value at the time of conversion (since you didn’t actually “buy” it for the rental, you can’t deduct original cost, but you can depreciate its value going forward).

Can I deduct furniture I bought before the rental was in service?
No. Expenses incurred before a property is placed in service (available for rent) are generally not currently deductible as rental expenses. Furniture purchased before the rental activity begins typically is treated as part of your startup or initial basis. You won’t get to deduct it until you start the rental and place that furniture in service – at that point, you’d depreciate it. Essentially, if you furnished the property while it was still personal-use or not yet a rental, you have to wait until the rental starts; then begin depreciation based on the lesser of cost or market value at that time. You cannot retroactively deduct the cost from prior years when there was no rental activity.