Section 179 vehicle deduction for a landlord - Posted by Fred

Real Estate Investing Apartments
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Posted by Dave Murray, Ohio CPA on August 15, 2003 at 12:33:33:

The IRS rules specifically prohibit the use of Sec. 179 for rental real estate.
You should always track mileage. We generally recommend following the IRS rules for multiple work sites. Essentially this means your first trip from home to the first stop and the last stop to back home are not business mileage.

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Section 179 vehicle deduction for a landlord - Posted by Fred

Posted by Fred on August 14, 2003 at 13:09:15:

I am a new landlord, currently set up as a sole-proprietor. I have 2 four-plexes and one single family home. I need to purchase a tools and a truck for hauling mowers, tools, repair material etc. So my question is:

  1. Can I use section 179 when filing a Schedule E??

  2. DO I deduct my small tools on Section 179??

  3. If I purchase the truck at the end of this year, and use it solely for business in the first year, I assume 100% of the cash paid is deductible, is that correct??

  4. What happens if I use it for personal use 49% of the time in 2004?? Does any of the previous depreciation have to be returned???

  5. Do I have to keep a written log is the vehicle usage??

  6. Do small pickups like a Chevy S-10 fall into the same category as passanger vehicles, or does it have a higher limit since it is a truck??

  7. I have a w-2 earnings, will the section 179 deduction can reduce those earnings if it is in excess of my rental earnings??

  8. I do materailly participate in the rentals, I do most of repairs, and property management.

  9. What milage counts as business mileage. Example, If I drive the truck to my w-2 job, then on the way home stop by the four-plex to collect some rent, is the milage from w-2 job to the four-plex then back to home business mileage??

I appreciate any clarification on these items.

Is there any clear concise description of the rules as they apply to a small time landlord??

Thanks,
Fred

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Re: Section 179 vehicle deduction for a landlord - Posted by Frank Chin

Posted by Frank Chin on August 16, 2003 at 08:14:40:

Hi Fred:

Dave gave you a good answer already.

There was a prior discussion on this board where several CPA’s commented regarding deducting items costing less than $500.00 I now expense items under $600.00 including tools, hot water tanks, per agreement with my CPA. Other CPA’s commented that the $500.00 amount was very common but have no objections to a client requesting an expense cutoff of $600.00.

As for car expenses, I keep a diary in my car for the starting mileage of the day and ending. A weekly expense report made from the diary is look like this:

Date—Miles—Property.A—Property.B----Personal

08/16 --60------20------------30-----------10

You simply net out your personal mileage. Its on a spreadsheet so everything is added up.

I beleive the IRS has a bulletin on auto usage, and I formatted my expense report accordingly.

Frank Chin