Hello everyone, I only have one rental and I replaced my roof at a cost of 6000. Under the new tax law is this cost totally deductible for 2018? Thanks No need for a CPA at this time

Let me disagree-- now is exactly the time you need to find an account who does RE deals.

Did you place the roof on the property before it was rented?

Anything done-- while no tenant was every in the property-- is added to the cost base of the property. Then the whole COSt- roof- anything you did "prior" to it being rented-- is depreciated as part of the whole purchase.

On my first tax return as a landlord I used a bookkeeper. Well the depreciation was wrong and I was audited for three long and painful years. One IRS agent was knowledgeable and on the other two we had to request a supervisor. My records were Ok but now I am anal about every deduction and it's receipt.

To actually answer your question, there are several checkboxes in the Schedule E that allow differing types of application of expense vs capital expenditure (depreciation).

1) de minimus election. This one won't work for you for two possible reasons. First, you must have a financial statement made at the beginning of the tax year (January, 2018) stating that you elect the de minimus option. I assume you don't have this, or you wouldn't be asking the question. But let's say that you do have one, even so, the maximum single expense can be only $5,000 so your $6,000 roof does not qualify.

2) Capitalize expenses. This one says you choose to capitalize and depreciate all expenses, this clearly is not what you want.

3) Small Taxpayer Safe Harbor. This is what you want to pick. The rule says:

"... permit[s] a qualifying small taxpayer to elect to not apply the improvement rules to an eligible building property if the total amount paid during 2018 for repairs, maintenance, improvement, and similar activities performed on the eligible building does not exceed the lesser of $10,000 or 2 percent of the unadjusted basis of the building.

Eligible building property includes a building unit of property that is owned or leased by the qualifying taxpayer, provided the unadjusted basis of the building unit of property is $1,000,000 or less.

A qualifying small taxpayer for purposes of this election must have average gross receipts of $10,000,000 or less.

So, in order to be able to expense your new roof, you need to do and/or have the following:

1 - you must pick the Small Taxpayer Safe Harbor election.

2 - your property must have an unadjusted basis (the value at the time you purchased it or put it into rental service) of $300,000 or more (if it was worth less than that, your $6,000 roofing is more than 2% of the basis).

3 - you must have have total repairs and improvements of less than $10,000 for the year, IOW, other than the roof you cannot have had $4,000 or more of other repairs, maintenance improvement or other similar activities on this property.

4 - The unadjusted basis (the value of the property at the time you purchased it or put it into service) was less than $1,000,000.

5 - You must have gross receipts of $10,000,000 or less for 2018.

Unfortunately, if your home basis was less than $300k or more than $1M, there's nothing you can do about it for 2018 or future years. The basis is the basis. The one item that you can control is to make sure that if you have a major repair coming up in a year, keep all other expenses down or delay them until the next year, so that in no single year your total expenses for repairs, maintenance, improvement, etc are less than $10k.

Look on previous tax threads, and you will see multiple opinions on doing your own taxes. Many have done it successfully. Many have never tried it. Some have done it unsuccessfully. If you are good at math, and you buy a decent tax program, and you are willing to put in a lot of time to make sure you understand it, then you can get it done. People on this board have promoted TurboTax, HR Block and Tax Act (I use Tax Act), so I think any of those will work for you. Just pick one that is made for use with rental property income on Schedule E.

My first year (with 4 purchased rental homes) it took me a good 80 hours or so of work to do my taxes. But I felt like I really understood them. Each year since the time has gone down. In the year I sold those 4 homes, it took a little bit longer, but by then, I had most of my tools in place to even make that easier.

Good luck. Hope it all works out for you.

You're in Mississippi. I don't see much chance that you will be able to do anything other than depreciate the roof over time. There is only one house in the state worth over $1 million and just 12 worth over $300k. Just kidding. No hate mail please.

There are many "tax" laws and codes that even an average accountant hasn't a clue on. Some were mentioned above. To re cap:

a) Expense

b) Depreciation

c) Add-to-basis

d) Cost segregation

Each one of the above is a tool to be used by an owner. When to use them and how to use them is "Key". Those terms should be studied, review and learned.

This stubborn oldish lady is with Martin(CO) - educate yourself, and use a tax program that will ask you questions and help you to research the answers. I've already spent many hours researching the 2018 changes. (Thanks, Martin, for the very well-expressed info!)

Why stubborn? As a small potatoes landlord, I refuse to pay about $1000 for someone to use a tax program to do my tax return. If the gubment has made the tax code impossible for the average schmoe to understand and comply with, that's plain wrong! I also vote for people who are trying their hardest to get this mess simplified.