New IRS regulations set to be implemented in 2014 will provide some relief to rental property owners. Until now, rental property owners have had to differentiate the way that they report repairs and improvements to a property, and consequently, break those activities into tax deductions (in the case of repairs) or depreciable events (in the case of improvements).
The new rules will simplify the tax reporting of overall property improvements that do not exceed the lesser of $10,000 or 2% of the property’s basis. Using an example of a rental property owner who has completed $5,000 in repairs, including a $4,000 new roof, to a house that has a basis of $300,000, the owner could deduct the entire $5,000 in the tax year that they are incurred. Before the new rule, the $1,000 in basic repairs could be deducted, while the $4,000 roof installation would have had to have been depreciated over a period of 27.5 years.
The new tax regulation is a welcomed relief to rental property owners that will encourage them to make necessary improvements to their properties, and which will ease their tax-reporting burden.
First Indiana Mortgage offers mortgage programs for primary residence and rental/investment properties. Visit our website at www.firstindianamortgage.com to view available programs and rates.
New IRS regulations set to be implemented in 2014 will provide some relief to rental property owners. Until now, rental property owners have had to differentiate the way that they report repairs and improvements to a property, and consequently, break those activities into tax deductions (in the case of repairs) or depreciable events (in the […]
