Writing off the remodel expense for a rental property

Member since 2019 · 29 posts · 18 votes

Hey all,

I am on W2 and curious if I can pay less tax by writing off the remodel expenses of a rental property (that’s is under my name).

As an example, if I earn 80k, and I remodel my rental property by spending 40k.
would that 40k tax deductible, and I end up paying tax only for 40k?

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Paul DefnginPro Member

Lender · Rockville, MD · Member since 2008 · 498 posts · 199 votes

Quote from @Saman Jafari:

Hey all,

I am on W2 and curious if I can pay less tax by writing off the remodel expenses of a rental property (that’s is under my name).

As an example, if I earn 80k, and I remodel my rental property by spending 40k.
would that 40k tax deductible, and I end up paying tax only for 40k?

You're best course of action here is to seek the advise of a CPA. There are some on this forum - and maybe one can chime in. That said, since you are now an investor, I recommend that you get yourself a good CPA. The money you spend is well-worth it in my opinion because they'll be well versed on all the ins-and-outs of what you can and cannot do to minimize your tax liabilities and maximize your deductions, as well as do forward tax planning with you.

That said, even when you get a good CPA, it's still recommended that you review and ask questions all the time. I can't tell you how many times, I've seen clients come to me with their tax returns and I see so many things that their CPA either did not claim or discuss with them. The common response I get from most is, "Well, I gave all my documents to my CPA and they prepared and filed it for me."

No matter what the CPA prepared, it's still ulitimately our responsibility to review and understand the numbers on the Tax Return as it's ours and not theirs. As they saying goes, "One Cares More About Your Money Than You".

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Paul DefnginPro Member
Lender · Rockville, MD · Member since 2008 · 498 posts · 199 votes
4y
Quote from @Saman Jafari:

Hey all,
I am on W2 and curious if I can pay less tax by writing off the remodel expenses of a rental property (that’s is under my name).
As an example, if I earn 80k, and I remodel my rental property by spending 40k.
would that 40k tax deductible, and I end up paying tax only for 40k?

You're best course of action here is to seek the advise of a CPA. There are some on this forum - and maybe one can chime in. That said, since you are now an investor, I recommend that you get yourself a good CPA. The money you spend is well-worth it in my opinion because they'll be well versed on all the ins-and-outs of what you can and cannot do to minimize your tax liabilities and maximize your deductions, as well as do forward tax planning with you.
That said, even when you get a good CPA, it's still recommended that you review and ask questions all the time. I can't tell you how many times, I've seen clients come to me with their tax returns and I see so many things that their CPA either did not claim or discuss with them. The common response I get from most is, "Well, I gave all my documents to my CPA and they prepared and filed it for me."
No matter what the CPA prepared, it's still ulitimately our responsibility to review and understand the numbers on the Tax Return as it's ours and not theirs. As they saying goes, "One Cares More About Your Money Than You".
1 Reply
Theresa HarrisPro Member
Member since 2019 · 15k+ posts · 11k+ votes
4y
Talk to an accountant as the expenses could be something you can claim now or when you sell the property. Different types of expenses have different rules.
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Saman Jafari
OP
Member since 2019 · 29 posts · 18 votes
4y
@Paul Defngin thanks for your response. Do you know any good CPA to recommend?
1 Reply
Jonathan R McLaughlin
Rental Property Investor · Boston, Massachusetts (MA) · Member since 2016 · 2k+ posts · 2k+ votes
4y
@Saman Jafari excellent advice to get a cpa and I have no advice…I believe you can always 0 out expenses against the rental income but not against other income unless you are a real estate professional.
Related but not the same, things can carry over against your basis.
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Paul DefnginPro Member
Lender · Rockville, MD · Member since 2008 · 498 posts · 199 votes
4y
Quote from @Saman Jafari:

@Paul Defngin thanks for your response. Do you know any good CPA to recommend?

I do but I do recommend checking for asking friends, associates, colleagues, family members, for referrals to someone local to your area. I think having that local relationship can pay dividends in the future, but that is just me. If you try that first and you are just not able to find someone then I believe Amanda Han (can't seem to tag her) and Brandon Hall (can't seem to tag him either) are pretty well-known in the Forum.
Last resort, if you are not able to connect with anyone, send me a direct message and I'll share with you some names to connect with. Good luck.
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Basit SiddiqiBusiness Member
Accountant · New York, NY · Member since 2015 · 8k+ posts · 3k+ votes
3y
If your income is $80,000(and you are single), you likely can use up-to $25,000 of losses from real estate to offset.

The question now is whether the $40,000 is a current deduction or it needs to be capitalized.
[email protected]917-280-8544
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Eliott Elias
Investor · Austin, TX · Member since 2021 · 9k+ posts · 5k+ votes
3y
Save $200 and book a CPA for an hour. Give them an ear full of questions, their advice is the only one you should take.
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