I owe $12K on my car. I could pay it off. 2 % interest on the unpaid balance.
I haven't had a vacation in ten years. I want to go to Budapest.
I have a rental house that needs a roof. Guessing $10K with gutters.
$12K is about 25% of what I need to build a garage on the back of a rental house that I think I could rent for $800 a month.
I am thinking the roof. Use a 20 year material and I can write the whole thing off?
What do you think?
Pay off car, save between $240-1000 in interest. (What you save, depends on the loan term and what's left on that term, assuming you owe $12K on the car). You'll still pay taxes on the $12K though.
Take the vacation - no tax break. You'll pay taxes on that $12K.
New roof on rental - Not a deduction and never will be. It just adds to the cost-basis of the property and gets depreciated over 27.5 years at around $445 a year. That's about $445 a year that will be added to the depreciation you're already taken. Remember, when you sell the property you have to recapture all depreciation taken in the year you sell, and that depreciation is taxable in the year you sell the property and recapture that depreciation.
Build new garage. No deduction or write-off ever, for as long as you live. All it does is add to the cost basis of your house, which will reduce your taxable gain when you sell at a gain, or increase your non-deductible taxable loss if you sell at a loss. Remember, losses on the sale of personal property are never deductible.
Were it me, I'd put a new roof on the rental. Then at the end of the current rental contract I'd raise the rent a minimum of 10%. If the current tenant moved because of it, then so be it. Now-a-days, I'd expect less than a month easy, between renters.
No. It allows you to expense something that would otherwise be a depreciable asset, if that asset costs $2,500 or less. It has nothing to do with class life, everything to do with costs. Note that this does not apply to everything under $2,500 as there are some exceptions. I myself don't know what those exceptions are, but the program does. I also know that a new roof for rental property which will cost "at least" $10,000 now-a-days, does not come anywhere close to qualifying to be expensed. It has to be depreciated over 27.5 years.
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