Investor · Shakopee, MN · Member since 2014 · 219 posts · 88 votes
I am getting prepared for taxes and I'm reviewing many of my expenses for a property in the last year.
Do I need to categorize my home depot and Lowes expenses based on whether the item was purchased was used for a repair, such as painting something, or an improvement, such as backsplash tile?
Or since I was rehabbing the whole house prior to renters moving in, does it count all as improvements?
Palo Alto, CA · Member since 2017 · 226 posts · 95 votes
9y
If you file a schedule c (income from business) there are many things that can be deducted or depreciated. Providing more than required info to the IRS can head them off from wanting to learn more because of an uncertainty.
On a schedule C probably everything you mention could be used to reduce your taxes.
Enrolled Agent · Richmond, CA · Member since 2016 · 225 posts · 148 votes
9y
@Dan D. The short answer is "yes". I tell my clients to itemize their purchases in Excel and just indicate the basic purpose (rehab on x, repair for y, etc) and then I sort through it to figure out what goes where. I'm not sure how your tax pro likes to receive expense documentation, but this method works for me.
Rent-ready expenditures (tools, materials, labor) are typically all improvements. You'll want to schedule time with a tax pro to be sure.
Investor · Shakopee, MN · Member since 2014 · 219 posts · 88 votes
9y
I have a tax person who I started using last year and I think I may have annoyed them with my lack of organization on this.
I'm trying to set him and her up better this year with a little more organization.
Just wasn't sure whether the pre-rent rehabbing was more improvements or repairs (like fixing a furnace that wasn't exactly functioning 100% or paying to have other items taken care of that would seem like maintenance, but it's the first time we're doing it.