Q. HI I have a rental property and I am planning to get the fence done for it.. will I get tax deduction for this ..
Thanks for all your suggestions.
Thanks for all your suggestions.
A. If you want the shortest possible answer, then probably yes.
However too many other factors come into play. Here're some of them.
1. Normally the fence will be considered "land improvement" which is not immediately deductible but deducted in small parts over 15 years.
2. Under current temporary rules, however, you may be able to deduct the entire cost right away. This is called "special depreciation allowance" but it is set to expire at the end of 2011. Next year is anybody's guess. Sometimes the Congress extends such breaks, and sometimes it does not.
3. Depending on your overall tax numbers, your deduction can be limited by so-called Passive Activity Rules. This is complicated and confusing area. One example: if between you and your spouse you made $150,000 this year, then your fence will not reduce your taxes.
4. Even if everything lines up perfectly, and you can get the deduction, remember that your deduction is not a refund of your cost. If you spent $2,000 building the fence, you may be able to cut something like $500 off of your taxes. $1,500 will still come out of your pocket.
Michael Plaks, EA, Houston TX
Specializing in Real Estate tax law
www.MichaelPlaks.com
However too many other factors come into play. Here're some of them.
1. Normally the fence will be considered "land improvement" which is not immediately deductible but deducted in small parts over 15 years.
2. Under current temporary rules, however, you may be able to deduct the entire cost right away. This is called "special depreciation allowance" but it is set to expire at the end of 2011. Next year is anybody's guess. Sometimes the Congress extends such breaks, and sometimes it does not.
3. Depending on your overall tax numbers, your deduction can be limited by so-called Passive Activity Rules. This is complicated and confusing area. One example: if between you and your spouse you made $150,000 this year, then your fence will not reduce your taxes.
4. Even if everything lines up perfectly, and you can get the deduction, remember that your deduction is not a refund of your cost. If you spent $2,000 building the fence, you may be able to cut something like $500 off of your taxes. $1,500 will still come out of your pocket.
Michael Plaks, EA, Houston TX
Specializing in Real Estate tax law
www.MichaelPlaks.com
What % do I get back in my taxes from repairs on a rental property in CA?
Q. Curious if anyone around here knows anything about tax deductions with rental properties. I am looking at a cost of about $4,000 for emergency plumbing repairs and wondering how much of that I can expect to get back at the end of the year in my tax return?
A. A "repair" of that amount is probably going to be classified as a capital improvement subject to depreciation. If so, the tax benefit will be spread over 27.5 years so you'll see very little of it on your 2010 return.
If you can make a case for expensing the entire amount (and that is VERY DOUBTFUL), multiply the cost by your tax rate. This may be 15%, 25% or more.
If you can make a case for expensing the entire amount (and that is VERY DOUBTFUL), multiply the cost by your tax rate. This may be 15%, 25% or more.
Can we get tax deduction on second house?
Q. I have two houses. The second house is the rental property which i bought last year. Can I get tax deduction on that or not.
A. Rental property expenses aren't itemized deductions, but are shown as expenses on schedule E.
Can I take a deduction on my Arizona Rental Property if I live in California?
Q. I have a rental property in Arizona but live and work in California. I rent a SFR to another family. The person who does my taxes has made deductions/losses for my rental property in Arizona on my California income tax returns. Is s/he correct? Or should those be on a Arizona income tax return? Another person recommended that I file an Arizona income tax even if I dont make money on the
rental property. IS s/he correct? Help!
rental property. IS s/he correct? Help!
A. You are a resident of CA so all your income belongs there. If you have enough net profit on the AZ house to require you to file for that state, you'll need to do so but I doubt that is the case.
Sounds like your preparer knows what he/she is doing and the other person does not.
Sounds like your preparer knows what he/she is doing and the other person does not.
Powered by Yahoo! Answers
No comments:
Post a Comment