Specific Guidance/Examples Regarding Operating Rental Expenses

[jpb6221111]

In reading the IRC regarding allowed deductible expenses for rental properties, can you elaborate with specific examples or instances that may be overlooked by non-tax experts regarding these costs? E.g. would any of the following be capitalized: purchase/install of blinds, furniture (limitations such as $ minimum to capitalize, etc.), replacement/install of new light switches, painting, etc.?

[Kelly Thomas C]

Repairs and maintenace costs (EXPENSES) are deducted from rental income in the year they are paid. Capital Improvements (CAPITALIZED) are not expensed rather depreciated. And that leads to what is an expense and what is capital improvement? I tend to use a cost criteria as an indicator. Less than $2,500 is expense. Over $2,500 MIGHT be capital improvement. The IRS wants you to capitalize as much as possible. Taxpayers wnat to to expense as much as possible. All I can recommend is don't be unreasonable. A roof is not an expense. You get a long life out of a roof. Exterior paint in certain climates might be an annual or bi annual expense. The longer life you get out of an cost, the more likely it is capital and needs to be depreciated...not expensed.

I hope this is helpful to you.

Kelly C.

CPA