Capital Investments vs Repairs

[Michael Lynch]

I'm new to BP in terms of posting, but not in terms of reading/podcasting. 

I currently am an owner of two duplexes in Buffalo; one I live in and rent out half (owned 2.5 years) and the other I formed a partnership (LLC) with and recently started renting (3 months ago).

Both are cash flowing nicely, which is great. Given that I'm relatively new, I'm trying to get more information about how taxes work regarding real estate. I would really like to do whatever possible to minimize my tax liability and overall AGI in the short-term with the idea of being better equipped later in life. I'm hoping to get some more information about different strategies I could take to make this happen. 

For example, in my owner occupied duplex, the current rental apartment is in needs of lots of updates. The kitchen and bathroom are dated (60's/70's). How could I go about investing in updating my rental unit (obviously I would base how expensive the updates are on the rent I think I could get, I wouldn't be too extravagant), in a way that gives me the most benefits tax wise? Would an updated kitchen/bathroom be capital improvements that need to be deducted over time, or would they be replacements that could be deducted that year? How could I go about structuring these remodels and updates in a way that gives me the most tax benefit? 

[Jai Reddy]

"most of the time it's much more beneficial to take deductions currently, as a dollar today is worth more than a dollar tomorrow"

Well said.