Posted by RR Smith on June 04, 2000 at 23:32:06:
Must books and knowledgeable CPA’s will answer the questions that JohnBoy posted
(expect LLC question), also experience and 3 or 4 deals…
Then your question list will start to look like the one that Neil (go blue!) Roseman posted
which are handled ( cussed and discussed) on this board (especially the LLC question). I have ventured for on a couple of them below (i am still not real clear on the vacancy, thing but, sure wish i was wrong!).
Is there any tax deductions for a potential rental property that is sitting vacant?
No, the OPPORTUNITY cost of your property sitting vacant, is a personnel experience write off YOU take when you have raised the rents past the (average) market. You can NOT deduct money you could have lost, or money you should have lost, or money you would have lost (coulda, shoulda, woulda, isn?t that were that old expression comes from?) You can deduct any money you spend during that time on maintenance and improvements, advertising, marketing, manager recruitment (my be a good idea for high vacancy property), phoning your RE agent to SELL, etc?which leads into my next question?
What type of things have to be depreciated vs. being written off as an expense?
Improvements (an official IRS term) are usually depreciated for max tax write offs OVER TIME. Most maintenance expenses are written off in the year incurred. It will be a judgment call most times which way you should go. Example: I have a fiberglass roof that is worn out, and am going to replace it with 26 gauge metal roof, (clearly an improvement) more hurricane proof (class 5, probably not 6). You could go either way, write the whole thing off as a maintenance expense or, write it off as a IMPROVEMENT and MARC depreciate it. There are IRS guidelines on what is an improvement (not a generic word as used here) that I recommend that you follow.