I looked around in the other threads, but I was not able to confirm some of my understanding. I will appreciate some guidance.

I recently purchased a house (Nov 2013). The house already had a tenant. I have agreed to let her stay until the end of the school year. I will keep the property as a rental.

I am tying to figure out how to do the depreciation on the rental and what amount of the closing fees can be claimed as expense or some goes under the basis for the depreciation.

First, I purchased the house at a much lower price than the last tax assessment from the township... so I think I can just use the same land/building ratio from last time to estimate the amount that should be for the building that I can depreciate... However, can I use part of the closing fees for expense or to increase the amount of the basis? Do I use the entire amount on the building estimated price or split it between land and building.

During the closing the previous owner also forwarded me some of already collected rent and the tenants security deposit. I will include this rental as income. I understand that the security deposit is no required to be reported as it will be returned to the tenant.

I also paid for the insurance for 12 months... hence some is for year 2014. I will need to prorate the amount for 2013 and use this as expense for 2013, right?

I had to do some minor repairs. I performed the work by myself. I purchased some tools, paint, etc... can I put this as expenses for 2013? Finally, I pay the water bill. What happens if the bill for Dec, comes in January and includes days from January? Do I have to prorate the amount for the days in 2013, or I put the entire amount in the next year?

I much appreciate your answers.

Best,
NM