8/19 Quick landlord question. If I'm paying X interest per year to a
rental property, does that mean I can write off X from my income?
Or do I do a (home-value)/27.5 depreciation for Schedule D? Can
I do both?
\_ You can do both, but you add the rent as income. I think you
know this, but it's the value of the improvement (less land)
depreciated over 27.5 years and then you have more profit when
you sell because your cost basis is lower.
\_ So if I didn't make any improvement (it came as is and I spent
$0 on improvement), then I can't do depreciation? Damn!
\_ No, you can still depreciate the value of the building over
27 and 1/2 years. Whacky, I know, but this is how the tax
law works. You probably need an accountant.
\_ "Improvement" means improvement to the vacant land, the
best example of which is a building. If you buy an investment
property to rent out for $300K and the land value is $200K
then you can only depreciate the value of the building itself
($100K). You cannot depreciate the entire $300K.
\_ Funny the government defines "improvement" as anything
better than the baren land
\_ Why is that funny? If you bring power and sewer to
the lot you've also improved it. You can spend a
lot of money on these improvements.
\_ I will convert a land to dumpster where people
dump shit into it. Will that increase the value
of the land since I spent money digging and putting
up infrastructures for it?
\_ Yes, because that's an investment setup, where
the payoff is people paying you to dump there.
If you don't charge, that's your problem.
\_ That makes complete sense. For a condo, MOST of the value
is in the building and not the land.
\_ الله أَكْ! |
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