Author Topic: Real Estate - Expense Writeoff  (Read 466 times)

kenmoremmm

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Real Estate - Expense Writeoff
« on: July 20, 2018, 10:16:45 AM »
Let's say I buy a POS property. Rent it for a year, then decide to scrape it and build new. Is there any way to claim the re-build costs as a rental expense that could be carried forward for years to offset income? I mean, if I replace the roof, the water heater, and other expensive items, those are all able to be used to offset rental income. I'm just not sure that a complete rebuild is within the bounds.

SeattleCPA

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Re: Real Estate - Expense Writeoff
« Reply #1 on: July 20, 2018, 12:27:17 PM »
The tangible property regulations describe the rules for writing off stuff. I've got a blog post here that gives details:

https://evergreensmallbusiness.com/tprs-a-guide-for-small-businesses-and-real-estate-investors/

BTW, note that the new tax law lets you use bonus depreciation on property with a recovery period less than 20 years... so the writeoffs should be faster than what I describe in the blog post if you use cost segregation. In fact, it's really possible especially now to use real estate to save for retirement via GIANT deductions:

https://evergreensmallbusiness.com/real-estate-vs-ira-and-401k-accounts-part-i/

You also need to keep the Sec. 469 "real estate professional rules" in mind. This post provides some details:

https://evergreensmallbusiness.com/real-estate-professional-audit-troubles/




YoungStache

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Re: Real Estate - Expense Writeoff
« Reply #2 on: July 27, 2018, 06:56:12 PM »
The tangible property regulations describe the rules for writing off stuff. I've got a blog post here that gives details:

https://evergreensmallbusiness.com/tprs-a-guide-for-small-businesses-and-real-estate-investors/

BTW, note that the new tax law lets you use bonus depreciation on property with a recovery period less than 20 years... so the writeoffs should be faster than what I describe in the blog post if you use cost segregation. In fact, it's really possible especially now to use real estate to save for retirement via GIANT deductions:

https://evergreensmallbusiness.com/real-estate-vs-ira-and-401k-accounts-part-i/

You also need to keep the Sec. 469 "real estate professional rules" in mind. This post provides some details:

https://evergreensmallbusiness.com/real-estate-professional-audit-troubles/


Can those expenses be used to offset short and long term capital gains, or ordinary income?