Advertise in December for tax purposes??

7 Replies

I am closing next week on my first rental property, I'm still trying to learn and absorb a lot of information. We have some rehab to do before it is rent ready but could probably complete by mid to late December. My question is how hard should we push to get this advertised to rent by the end of the year for tax purposes?  In reality I see us being able to move a tenant in by January or February but will still be finishing up the kitchen, baths, flooring and carpet into December. 

Yes I believe we could get it ready by the mid to end of December with a LOT of pressure but I doubt we'd have a tenant in by end of year.  I'm wondering if we should really push to get it listed or just wait till next year which would probably be more realistic...my husband will putting in crazy hours to get it done.  

@Michelle Born

Depends on if the losses will be non-passive or passive to you/your husband.  If you're both not RE professionals, your AGI is above $150k, and you don't have net passive taxable income from other sources, there's no incentive to push to get it done before year-end.  Absolutely zero.  The losses will be suspended and carried forward to the 2020 tax year.

If one of you is an RE professional the answer becomes an analysis to determine how much is going to get expensed vs capitalized, and just how big a tax benefit that expense will provide to you based on your federal and state marginal tax rates, counterbalanced by what your sanity is worth to you and how cranky you want your husband to be during the holidays.  The answer to your question in this situation is far from a simple "yes" or "no".

@Michelle Born Taxes would not at all be a factor in my decision. Spending money for the sole purpose of getting a tax deduction is stupid. Spending a dollar to save 35 cents does not ever make sense.

@Eamonn McElroy Thank you, the first paragraph would be our situation and I thought I read about that but there's been so much information swirling in my head.  

@Ned Carey there would be no additional spending of money it was a question of whether we try and get all the work done quickly (we are doing it ourselves) to see any benefit with deductions.  I was reading about the BARRRR method and wondered if I could help my tax situation, but thank you for your help, I'm hoping to get a lot of questions answered here!

@Michelle Born again I wouldn't rush to get it done for tax reasons.  I would expedite it as much as possible to get the cash flow coming in sooner. The sooner it is rented the sooner it stops being a drain and starts generating income. 

@Michelle Born Use the BARRRR method and put a For Rent sign in the yard.  You will be able to deduct operating expenses for this year, if your rental is habitable by mid-December as you mentioned.  You might actually find a tenant earlier than you mentioned and can decide whether or not to speed up the rehab.

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