Rentals-Tax advantages? - Posted by B WADE

Posted by Mark (SDCA) on May 08, 2000 at 11:54:01:

Actually, I think it IS a good idea to have negative cash flow after taxes… When you count in depreciation, most properties don’t cash flow if they are highly leveraged. And I happen to like the fact that I can take that against personal income.


Rentals-Tax advantages? - Posted by B WADE

Posted by B WADE on May 06, 2000 at 13:56:41:

What exactly are the tax advantages of owning rental property. Expenses-How much is deductible? Say I spend 1000.00 on repairs or improvments how much of this can I expect to get back at tax time?.Interest-How much is deductible? I know on my personal residence if I dont have at least a certain amount paid in interest I cant claim it at all. Is this the same on investment property or is it all deductible? Any responses would be greatly appreciated Thank You

Re: Rentals-Tax advantages? - Posted by Bud Branstetter

Posted by Bud Branstetter on May 06, 2000 at 15:56:33:

The broad view is that whatever it takes to produce that income is deductable against that income. On investment property you report on a schedule E. There are line items to deduct interest, repairs, taxes, mileage, supplies etc. Many items are harder to fit on schedule E, such as training, and office supplies. You don’t get the money you spend back at tax time you only offset it as a deduction against income.

Another story on improvements. Place a new water heater and it should be capitalized and depreciated over a number of years. Show it as a plumbing repair and it is all deductable in the current year.

You get depreciation on the building as a deduction. You can get up to 25K write off against other income if you don’t make too much. Not the smartest thing to have is a negative cash flow before or after taxes. In general you should not be buying rental property for tax considerations if you intend it as an investment.