hello i close on a duplex 11-16-2017 doing a lot of repair to the property , flooring , roof , gutters , windows , countertops bathroom and kitchen repair kitchen cabinets and bathroom cabinets , it need a new washer and dryer and stove and refrigerator , place lighting fixtures , anyway can i claim these on my taxes for a deductions .....p.s .I live on one side of the duplex .. and do anybody have a list of tax deduction items for rental property
YES! Actually, you need to work with a tax consultant to find out. I believe there is book BP publishes that talks about this same thing. Accompany that with a tax consultant will help derive a tax strategy that best fits your needs. For example, should/can you depreciate the appliances over time or one lump sum in one year? Congrats on closing & house hacking!
Congrats on closing on the duplex recently!
It sounds like you are househacking!
First and foremost - It will depend on if the duplex is ready for tenants. If it is not - you may have to capitalize the costs and not expense/depreciate it until it is ready for living/renting.
Then since you are househacking and living in 1 unit and renting out the other - you would be entitled to a full deduction for repairs and costs associated with the unit that the renter is living in.
Other costs that are associated with the house such as real estate taxes, mortgage interest, repairs to common areas that are not assignable to either unit - you are entitled to a deduction based on some ratio.
Renters rooms / total rooms or renters square footage / living square footage.
If you put the washer, dryer and stove in the rental unit - you can argue that it is deductible.
if you put the washer, dryer and stove in your unit - it is likely not deductible.
The next part is whether or not the repair/improvement is currently deductible or capitalized and depreciated over MACRS.
Repairs are currently expensed
Improvements/Replacing are capitalized. However, improvements/replacing items with a cost below $2,500 can be currently expensed.
Let me know if you have any other tax questions.
My understanding is that any money spent on a capital improvement before the property is placed in service must be capitalized (i.e. added to tax basi). Repairs on the rental can only be deducted after the property is in service as a rental. There are new safe harbor rule that may allow you to deduct low cost capital improvements instead of depreciating, but they only apply to property that is in service.
Repairs to your residence unit are personal expenses and not deductible. Capital improvements to your residence unit are capitalized, never expensed.
Just how I see it.
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