No, the $3,000 long-term capital gain from selling stock cannot be directly deducted from the $4,000 spent on rental house repairs.
These two items are treated separately on your tax return:
- Rental House Repairs: The $4,000 spent on repairs for your rental property can be deducted as a rental expense on Schedule E of your tax return. This will reduce your rental income and, consequently, your taxable income.
- Long-Term Capital Gains: The $3,000 long-term capital gain from selling stock is reported on Schedule D. Long-term capital gains are typically taxed at a lower rate than ordinary income. If you have any stock losses this gain can be offset against it.
While you can’t directly offset the repair expenses with the capital gains, both will affect your overall taxable income. The repair expenses will reduce your rental income, and the capital gains will be taxed at the applicable long-term capital gains rate.
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