Welcome Guest. Register Now!  



Reply
 
LinkBack Thread Tools Search this Thread Display Modes
  #1 (permalink)  
Old 02-02-2017, 06:35 PM
Junior Member
 
Join Date: Feb 2017
Posts: 1
Improvement Deductions

I own a two family home. I live in the lower unit and rent the upper unit. I work and get a W2.

In 2016 I remodeled the bathroom/kitchen in the upper unit to the tune of ~$40K.

My question is can I deduct this expense without capitalizing it? Can I deduct it 100%? If the deduction takes to paying zero taxes is there carryover to 2017?

Thanks.

Len



Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!Reddit! stumble!bookmark in google!Share on Facebook!
Reply With Quote
  #2 (permalink)  
Old 02-02-2017, 06:52 PM
Moderator
 
Join Date: Oct 2010
Posts: 5,258
My question is can I deduct this expense without capitalizing it?===>I do not think so; The general rule is that the cost of ?repairs? incurred to maintain your rental properties may be deducted from each property?s taxable income in a given year. However, some repairs are considered ?improvements? in which you?re not allowed to deduct the entire expense immediately.

Can I deduct it 100%?====>As said no.

If the deduction takes to paying zero taxes is there carryover to 2017?==>Yes; I mean, unless you are a real estate professional,
the IRS considers real estate investment a passive activity
When your losses exceed the maximum amount established by the IRS for a passive loss, you can carry over the excess loss forward to the next tax year. You can then continue to carry forward these losses until you sell your property or use the entire amount of the loss carried forward to offset other passive income. You can also use carryover losses to offset the gains from ultimately selling your property. Carefully keep track of your loss carryover so that you can use the loss should you decide to place your property on the market. If you actively participated in real estate -- for example, you owned and managed a rental property -- you can deduct up to $25K of your passive real estate losses against your regular taxable income. This special $25K allowance decreases by 50 percent of the amount of your modified adjusted gross income that exceeds $100K. It disappears completely if your MAGI exceeds $150K.



Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!Reddit! stumble!bookmark in google!Share on Facebook!
Reply With Quote
Ads
Reply



Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

vB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
deductions jskipton Itemized Deductions 1 01-11-2015 04:30 AM
Leasehold improvement donation to 501c3 grandaeriefoe Non-Profit Organisation 1 02-18-2014 01:56 AM
Deductions BobbleHeadJo Filing Requirements 1 04-06-2013 09:20 AM
Improvement deduction question sonofasailor3 Rental Real-Estate 1 05-05-2011 01:35 AM
Is interest from credit card's deductible if funds used are for home improvement? Edmund Itemized Deductions 1 04-06-2007 12:31 PM

Follow us on Facebook Follow us on Twitter Google Buzz Rss Feeds

» Categories
 
Individual
 » Income
 » IRA/Sep
 » Medical
 
Corporations
 » Payroll
 
Forum for CPAs
 
Financial Planning
 
 
 

» Recent Tax Q&A
No Threads to Display.