New Tax Rules next year

[Jerome Kaidor]

Hello all,

   I just did a casual web search for some tax info, and found some fairly horrifying stuff here:

http://www.nolo.com/legal-encyclopedia/repairs-vs-...

  Basically, the IRS is going to get a LOT fussier about repair and maintenance.  They don't want you to expense it, they want you to depreciate it.  For 27.5 years, please.

Is it Betterment, Adaptation or Restoration?  Depreciate it, please.

Most repair reasonably counts as "Restoration" :(.

Maybe you don't have to, if it's a really small thing.   Or do you?  The definition of "really small thing" is also changing.  The IRS will now divide our properties into "UOP"s ( Units of Property ).  For example, the HVAC stuff is one Unit of Property.  Even if a repair is a piddly little thing related to the entire property, you will still have to depreciate it if it's a significant part of its respective UOP.

  GAAK! 

This won't mean much to the "fix n' flip" folks, because all this stuff will just become part of their basis anyway.   But to us stick-in-the-mud buy-and-hold landlords, it's a VERY big deal.  We typically operate on pencil-thin margins.    

Not only that, but we will have to expend significant effort ( time is money, remember? ) keeping track of this crap.  And at tax time, the more depreciation schedules you have,

the more money your tax service ( or CPA ) makes.

GAAK!

                        - Jerry Kaidor