I recently purchased my first 2 single family homes as rental properties and have a few tax questions. I purchased new appliances, new waterheaters, and new floating floors, as well as fresh paint throughout the homes.
Is there a way for some of that to be deducted the same year I purchased or does it all go as a capital expense?
Real Estate Broker · Hyde Park Tampa, FL · Member since 2019 · 2k+ posts · 3k+ votes
4y
You need to know the tax code...
"Purchases of major appliances like a refrigerator, carpet, stove, washer and dryer are all tax deductions for landlords. However, you may not be able to deduct the entire cost of the appliance the year you buy it. That's because the IRS considers these purchases to be assets rather than expenses."
More:
"Here's the basic rule from the IRS: An expense is for an improvement if it:
1. makes a long-term asset much better then it was before
2. restores it to operating condition, or
3. adapts it to a new use.
In contrast, expenses you incur that don't result in a betterment, restoration, or adaptation are currently deductible repairs."
Yep, clear as mud...And, I actually met the person who wrote the modern-day ("simplied") tax code. He said it was real simple until it got into the hands of the attorneys. So bottom line: the answer isn't simple. Do your homework..don't use common sense because it doesn't apply...
Real Estate Broker · Hyde Park Tampa, FL · Member since 2019 · 2k+ posts · 3k+ votes
4y
You need to know the tax code...
"Purchases of major appliances like a refrigerator, carpet, stove, washer and dryer are all tax deductions for landlords. However, you may not be able to deduct the entire cost of the appliance the year you buy it. That's because the IRS considers these purchases to be assets rather than expenses."
More:
"Here's the basic rule from the IRS: An expense is for an improvement if it:
1. makes a long-term asset much better then it was before
2. restores it to operating condition, or
3. adapts it to a new use.
In contrast, expenses you incur that don't result in a betterment, restoration, or adaptation are currently deductible repairs."
Yep, clear as mud...And, I actually met the person who wrote the modern-day ("simplied") tax code. He said it was real simple until it got into the hands of the attorneys. So bottom line: the answer isn't simple. Do your homework..don't use common sense because it doesn't apply...
Investor · Shelton, WA · Member since 2017 · 6k+ posts · 6k+ votes
4y
If you are going to succeed in this business get an accountant, one that will help you strategize keep things clean and get between you and the IRS should that happen; and it does.
@Silas B. don't listen to any of the above advice. Google De Minimis Safe Harbor Election. your tax preparation software will have a checkbox when doing your returns.