Q: What kind of deduction can I take on rental property improvements?
A:
If it's a repair you deduct it in the year it's incurred. If it's an improvement you adjust basis and depreciation.
Any expense that is incurred under the ordinary and normal course of a trade or business is deductible. 26 USC 162.
A: The IRS recently came out with some regulations indicating that if you were doing work on a piece of rental property and the invoice for that work was $2,500 or less, you wouldn't have to do the analysis as to whether that was considered a repair or an improvement. You could always consider it a repair and deduct the whole cost of the repair/improvement. This was to make the audit process more efficient. However, if the invoice was more than $2,500 and the work was considered to be an improvement to the property, or added value, then you would have to depreciate the cost of that improvement over the life of the asset. In a rental property's case, it would be depreciated out over 27.5 years for residential and 39 years for commercial.
Justia Ask a Lawyer is a forum for consumers to get answers to basic legal questions. Any information sent through Justia Ask a Lawyer is not secure and is done so on a non-confidential basis only.
The use of this website to ask questions or receive answers does not create an attorney–client relationship between you and Justia, or between you and any attorney who receives your information or responds to your questions, nor is it intended to create such a relationship. Additionally, no responses on this forum constitute legal advice, which must be tailored to the specific circumstances of each case. You should not act upon information provided in Justia Ask a Lawyer without seeking professional counsel from an attorney admitted or authorized to practice in your jurisdiction. Justia assumes no responsibility to any person who relies on information contained on or received through this site and disclaims all liability in respect to such information.
Justia cannot guarantee that the information on this website (including any legal information provided by an attorney through this service) is accurate, complete, or up-to-date. While we intend to make every attempt to keep the information on this site current, the owners of and contributors to this site make no claims, promises or guarantees about the accuracy, completeness or adequacy of the information contained in or linked to from this site.
