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  • Why is painting between tenants deductible

    From Ian Pilcher@21:1/5 to All on Sun Mar 12 04:15:27 2023
    I'm making my annual attempt to understand the rules around which
    "repairs" to residential rental properties can be fully deducted in the
    year in which the expense was incurred.

    One thing that puzzles me is the seeming consensus that repainting a
    rental property between tenants is a deductible expense. How can this
    not be considered a restoration, which would require capitalization?

    Any insights into the reasoning would be appreciated.

    Thanks!

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  • From Stuart O. Bronstein@21:1/5 to Ian Pilcher on Sun Mar 12 07:29:48 2023
    Ian Pilcher <[email protected]> wrote:

    I'm making my annual attempt to understand the rules around which
    "repairs" to residential rental properties can be fully deducted
    in the year in which the expense was incurred.

    One thing that puzzles me is the seeming consensus that repainting
    a rental property between tenants is a deductible expense. How
    can this not be considered a restoration, which would require
    capitalization?

    Here's what the IRS has to say:

    "By itself, the cost of painting the exterior of a building is
    generally a currently deductible repair expense because merely painting
    isn't an improvement under the capitalization rules.

    "However, if the painting directly benefits or is incurred as part of a
    larger project that's a capital improvement to the building structure,
    then the cost of the painting is considered part of the capital
    improvement and is subject to capitalization."

    There's also a safe harbor for projects (based on individual invoices)
    that cost under $2500. The IRS allows you to treat them as deductible
    even if they might otherwise be considered capital improvements.


    --
    Stu
    http://DownToEarthLawyer.com


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    << The foregoing was not intended or written to be used, >>
    << nor can it used, for the purpose of avoiding penalties >>
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    << >>
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    << Copyright (2011) - All rights reserved. >>
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  • From Taxed and Spent@21:1/5 to Ian Pilcher on Sun Mar 12 14:24:00 2023
    On 3/12/2023 12:15 AM, Ian Pilcher wrote:
    I'm making my annual attempt to understand the rules around which
    "repairs" to residential rental properties can be fully deducted in the
    year in which the expense was incurred.

    One thing that puzzles me is the seeming consensus that repainting a
    rental property between tenants is a deductible expense. How can this
    not be considered a restoration, which would require capitalization?

    Any insights into the reasoning would be appreciated.

    Thanks!


    Because it doesn't extend the life of the property.

    --
    << ------------------------------------------------------- >>
    << The foregoing was not intended or written to be used, >>
    << nor can it used, for the purpose of avoiding penalties >>
    << that may be imposed upon the taxpayer. >>
    << >>
    << The Charter and the Guidelines for submitting posts >>
    << to this newsgroup as well as our anti-spamming policy >>
    << are at www.asktax.org. >>
    << Copyright (2011) - All rights reserved. >>
    << ------------------------------------------------------- >>

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  • From Adam H. Kerman@21:1/5 to Stuart O. Bronstein on Sun Mar 12 14:25:02 2023
    Stuart O. Bronstein <[email protected]> wrote:
    Ian Pilcher <[email protected]> wrote:

    I'm making my annual attempt to understand the rules around which
    "repairs" to residential rental properties can be fully deducted
    in the year in which the expense was incurred.

    One thing that puzzles me is the seeming consensus that repainting
    a rental property between tenants is a deductible expense. How
    can this not be considered a restoration, which would require >>capitalization?

    Here's what the IRS has to say:

    "By itself, the cost of painting the exterior of a building is
    generally a currently deductible repair expense because merely painting
    isn't an improvement under the capitalization rules.

    "However, if the painting directly benefits or is incurred as part of a >larger project that's a capital improvement to the building structure,
    then the cost of the painting is considered part of the capital
    improvement and is subject to capitalization."

    There's also a safe harbor for projects (based on individual invoices)
    that cost under $2500. The IRS allows you to treat them as deductible
    even if they might otherwise be considered capital improvements.

    Do you recall if this gets inflated every year?

    I have not looked any of the following up, but logically (logic having
    nothing to do with the tax code), paint lasts the same amount of time
    whether if it's applied finishing a construction project or as part of
    ongoing building maintainence.

    If the taxpayer carefully separated my bills for the building reconstruction project into two piles -- durable versus nondurable portions of the project
    -- and expensed the nondurable parts of the project, would IRS challenge
    that position? If the contractor's time was itemized separately, is that
    an expense rather than capitalized into the project?

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    << ------------------------------------------------------- >>
    << The foregoing was not intended or written to be used, >>
    << nor can it used, for the purpose of avoiding penalties >>
    << that may be imposed upon the taxpayer. >>
    << >>
    << The Charter and the Guidelines for submitting posts >>
    << to this newsgroup as well as our anti-spamming policy >>
    << are at www.asktax.org. >>
    << Copyright (2011) - All rights reserved. >>
    << ------------------------------------------------------- >>

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  • From Stuart O. Bronstein@21:1/5 to Ian Pilcher on Wed Mar 15 04:51:15 2023
    Ian Pilcher <[email protected]> wrote:
    Taxed and Spent wrote:

    Because it doesn't extend the life of the property.

    Neither does replacing a broken built-in microwave, but the IRS is
    very clear that appliances must be capitalized.

    But a microwave has its own useful life that is longer than one year.

    It doesn't always make sense because the line between repairs and
    capital improvements can be thin. That's why there are specific rules
    for specific things.


    --
    Stu
    http://DownToEarthLawyer.com


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    << ------------------------------------------------------- >>
    << The foregoing was not intended or written to be used, >>
    << nor can it used, for the purpose of avoiding penalties >>
    << that may be imposed upon the taxpayer. >>
    << >>
    << The Charter and the Guidelines for submitting posts >>
    << to this newsgroup as well as our anti-spamming policy >>
    << are at www.asktax.org. >>
    << Copyright (2011) - All rights reserved. >>
    << ------------------------------------------------------- >>

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  • From Ian Pilcher@21:1/5 to Taxed and Spent on Wed Mar 15 04:19:21 2023
    On 3/12/23 13:24, Taxed and Spent wrote:
    Because it doesn't extend the life of the property.

    Neither does replacing a broken built-in microwave, but the IRS is very
    clear that appliances must be capitalized.

    --
    ========================================================================
    Google Where SkyNet meets Idiocracy ========================================================================

    --
    << ------------------------------------------------------- >>
    << The foregoing was not intended or written to be used, >>
    << nor can it used, for the purpose of avoiding penalties >>
    << that may be imposed upon the taxpayer. >>
    << >>
    << The Charter and the Guidelines for submitting posts >>
    << to this newsgroup as well as our anti-spamming policy >>
    << are at www.asktax.org. >>
    << Copyright (2011) - All rights reserved. >>
    << ------------------------------------------------------- >>

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    * Origin: fsxNet Usenet Gateway (21:1/5)
  • From Adam H. Kerman@21:1/5 to Ian Pilcher on Wed Mar 15 10:40:01 2023
    Ian Pilcher <[email protected]> wrote:
    On 3/12/23 13:24, Taxed and Spent wrote:

    Because it doesn't extend the life of the property.

    Neither does replacing a broken built-in microwave, but the IRS is very
    clear that appliances must be capitalized.

    Despite the attachment, it's personal property under federal tax law,
    although the attachment may make it real property under state law. Attached personal property is neither a repair nor improvement to the building.

    You may also elect the Section 179 expense deduction in which you are effectively NOT capitalizing it. Looking it up, it's up to $1.08 million
    for 2022 and $1.16 million for 2023.

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    << ------------------------------------------------------- >>
    << The foregoing was not intended or written to be used, >>
    << nor can it used, for the purpose of avoiding penalties >>
    << that may be imposed upon the taxpayer. >>
    << >>
    << The Charter and the Guidelines for submitting posts >>
    << to this newsgroup as well as our anti-spamming policy >>
    << are at www.asktax.org. >>
    << Copyright (2011) - All rights reserved. >>
    << ------------------------------------------------------- >>

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