Repair writeoff limit
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Repair writeoff limit (by Bud [VA]) Mar 14, 2023 8:24 AM
       Repair writeoff limit (by Robert,OntarioCanada [ON]) Mar 14, 2023 9:38 AM
       Repair writeoff limit (by Oregon Woodsmoke [ID]) Mar 14, 2023 10:35 AM
       Repair writeoff limit (by wmh [NC]) Mar 14, 2023 10:54 AM
       Repair writeoff limit (by Jim in O C [CA]) Mar 14, 2023 11:36 AM
       Repair writeoff limit (by Robert J [CA]) Mar 14, 2023 11:43 AM
       Repair writeoff limit (by Ray-N-Pa [PA]) Mar 14, 2023 11:57 AM
       Repair writeoff limit (by myob [GA]) Mar 14, 2023 4:11 PM
       Repair writeoff limit (by Bud [VA]) Mar 14, 2023 6:10 PM
       Repair writeoff limit (by WMH [NC]) Mar 14, 2023 6:19 PM
       Repair writeoff limit (by don [PA]) Mar 15, 2023 3:34 AM
       Repair writeoff limit (by don [PA]) Mar 15, 2023 3:37 AM

Repair writeoff limit (by Bud [VA]) Posted on: Mar 14, 2023 8:24 AM

I had a long term tenant move out in July and I spent 4 months restoring the house back to good condition, spent about 11K in expenses and materials. I got new tenants in Nov. Everything good. I went to get my taxes done and since I only collected about $5500 in rent for the year that's all I can write off and the rest will have to wait until next year. I've been renting it a long time ( 20+ yrs) and I seem to recall in previous years when the year was a loss I could write it off.

Should I look for a different tax person or is this the way it is?

Repair writeoff limit (by Robert,OntarioCanada [ON]) Posted on: Mar 14, 2023 9:38 AM

After a period of time major components in a rental unit or house wear out where a complete renovation is required. In the long term the value of property is important. Rentals is not putting in a investment certificate where no money goes in.

Repair writeoff limit (by Oregon Woodsmoke [ID]) Posted on: Mar 14, 2023 10:35 AM

You should be able to write that off against your other income.

Repair writeoff limit (by wmh [NC]) Posted on: Mar 14, 2023 10:54 AM

There are Repairs (deductible even if they exceed income) and there are Capital Improvements (begin depreciation in the year they were placed in service.)

If you took the unit off the market (i.e. it was not available to rent) everything you did was a Capital Improvement. If you still had it available while you worked on it, most things would be repairs...

Repair writeoff limit (by Jim in O C [CA]) Posted on: Mar 14, 2023 11:36 AM

Check with another qualified tax person.

Repair writeoff limit (by Robert J [CA]) Posted on: Mar 14, 2023 11:43 AM

I purchased a once million dollar apartment building back in 1997, at the depths of the recession for only $250,000. It was a Bank REO that they couldn't dump at almost any price. The building had gangs, squatters and some paying tenants.

I spent the next 9 months doing evictions, repairs and remodeling. I spent around $200,000 on repairs during that period.

Since all units were in service when I purchased the property, and could prove it with court documents, I was depreciation the purchase over 27.5 years and then taking my $200,000 in repairs and breaking it down by:



and deprecating the life of the products (Such as appliances, carpets, blinds, painting, flooring ,etc)

The IRS saw a red flag, paying $250,000 and then writing off $200,000 on top of the purchase price associated with the structure. And during that 9 months only having $9,750 in re-portable rental income for that property.

I found myself in front of two IRS auditors. They were after my blood. Tax fraud, etc. They said I was in trouble and I was lucky if I didn't go to jail. I responded with treats of my own.

I told them that I was a "Real Estate Professional and my write-offs were perfectly legal"!

They responded by saying that I didn't have a "Brokers" License and therefor wasn't a pro!

I said the audit is over, I won't deal with clowns, jokers and those who take the attitude to threaten my freedom.

So their supervisors boss showed up and replaced the IRS clowns with someone who knew the law. I was a real estate professional with $400,000 in other rental income and $350,000 in other related income and was allowed to offset my losses against my rental income.... The joke was on them.

Repair writeoff limit (by Ray-N-Pa [PA]) Posted on: Mar 14, 2023 11:57 AM

It really depends on how detailed you want to detail that 11,000 in repairs. That said, someone else might judge this as $6,000 in repairs and 5,000 in capital improvements.

You are dealing in a grayer area. One of the test questions on the repair, how long will the repair last as compared to the system that did exist before and how long will the that system now expected to last

You might want to look up safe harbor limitations.

You claim income and expenses the same year that they occur unless there is a qualified exception. So if you indeed have 11,000 in expenses compared to half of that in income, you will will take that against other income you have or you can carry over the negative number over to the following year

Repair writeoff limit (by myob [GA]) Posted on: Mar 14, 2023 4:11 PM

wmh that I believe is wrong.

If you just purchased a property and it has NEVER been up for rent by you then yes any improvements are capital improvement. To coincide with that-- if you have no rentals and take training you can not deduct that expense. Once you have a rental property your classes etc, can be claimed.

The part of your statement about in-between tenants that those are capital improvements I think is incorrect. It has been your rental its not new to the fold. Basic in service for you.

I was audited for this years ago. Only had to pay the interest due no ignorance penalty. --108.239.xx.xx

Repair writeoff limit (by Bud [VA]) Posted on: Mar 14, 2023 6:10 PM

I'll just wait to get the rest of it next year, not really that big a deal. Thanks for the replies, I appreciate it.

Repair writeoff limit (by WMH [NC]) Posted on: Mar 14, 2023 6:19 PM

MYOB, you might be right about that but the rules are dam vague about repairs vs. improvements and when, as you know!

But I thought - I thought I heard it here in fact - that if you take a property OFF THE MARKET to renovate, it's improvement not repair.

Repair writeoff limit (by don [PA]) Posted on: Mar 15, 2023 3:34 AM

Do you have other rentals? If so, you can write off the loss against their income. If not, then you are dealing with the issue of writing off passive losses against what I assume would be active income from your job. It gets complicated. If you meet the requirements of material participation and you fall under the income limits, OR, you qualify as an active investor, you can write off the passive loss against the active income. If you do not, then you have to carry the losses forward as your tax preparer stated,

Repair writeoff limit (by don [PA]) Posted on: Mar 15, 2023 3:37 AM

You are all missing the point entirely on the post. It is not a question of repair vs. cap improvement. If that were the issue, the amount of rental income would be irrelevant.

The issue that his tax preparer is raising is the deduction of passive rental losses against active income from other sources.

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