Tax right offs for rehab demo

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Tax right offs for rehab demo

Parmer Cherry
Rental Property Investor · Raleigh, NC · Member since 2018 · 14 posts · 3 votes
Hey guys, I am a new real estate investor and I am trying to save money in every way during our second deal, first rehab. I remember working for a real estate investment group and they mentioned taking the removed faucets, toilets, fixtures, etc to places that would give you a tax right off. I seem to remember habitat for humanity being one. Does this sound familiar to anybody? Any strategies like this to save money during the rehab process? Thanks!!!
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  • Ashish AcharyaBusiness Member
    CPA, CFP®, PFS · FL · Member since 2017 · 5k+ posts · 3k+ votes
    7y

    @Parmer Cherry, 

    Yes you can donate items to qualified charity and possibly get a deduction. 

    However, there are limitation. It only works if your itemize in your personal return. 

    Charitable deduction is a part of itemized deduction. 

    You would not itemize unless your itemized deductions are greater than standard deduction 24k for married. 

    So, if your itemized deduction after donating is 18k, you did all the hassle for nothing. 

    Also, your charitable deduction is again limited to certain % of AGI as well. 

    Thus, before going through the hassle, it would be benfitial to ask a professional run a various projections based on your expected income and how much you would  be donating. 

    Really can’t give you exact answer but generally, if your donation is not more than 10k, you will not see any benefit. 

    I am taking very general approach to come up with that number.  

    10k cap for state and local tax. New law

    5k for Interest deduction 

    10k for charity 

    Total 25, and still you got 1k more than standard deduction.

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  • Parmer Cherry
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    Rental Property Investor · Raleigh, NC · Member since 2018 · 14 posts · 3 votes
    7y
    @Ashish Acharya Thank you man! So helpful and concise for someone like myself to understand. I love this site.
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