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.