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Updated about 7 years ago on . Most recent reply presented by

User Stats

169
Posts
58
Votes
Ted Klein
  • Investor
  • Redmond, WA
58
Votes |
169
Posts

Tax Implications of a Tenant Requested Improvement

Ted Klein
  • Investor
  • Redmond, WA
Posted

Awhile back I posted about a tenant I have that has requested to make a to my property. Long story but to make it short, tenant has agreed to pay approximately $8400 to improve the shower stall. The bid for the improvement came in higher than expected, so I offered to carry a balance  if they agreed to pay a substantial down payment and to make monthly payments on the balance.

As it stands, the tenant will make a down payment of $4000 and I will pay the remainder with the tenant agreeing to pay an additional $500 per month until paid in full.

My question is how will this affect my taxes for this year? Technically I am loaning half of the money and being paid that amount back interest free. What startegies should I use to minimize tax implications and to get the most benefit.

I might add, the tenant is 84 years old and is retired, has been a great tenant and pays on time. Additionally, I have had a promissory note drafted with my attorney to ensure that I have some recourse if the tenant passes or fails to pay as agreed.

I have already consulted with my tax preparer, but wanted to ask the BP community to ensure that we get this right.

Most Popular Reply

User Stats

169
Posts
58
Votes
Ted Klein
  • Investor
  • Redmond, WA
58
Votes |
169
Posts
Ted Klein
  • Investor
  • Redmond, WA
Replied

@Ryan Murdock Luckily, this is not the type of handicap accessible shower you are thinking of. This is a standard shower pan with tile walls and a sliding shower door. The tenant is still very mobile but just didn't like stepping over the tub. I had already installed grab bars in the shower and those will be re-installed in the new shower to enhance safety. So there are no plans to remove the shower installation when she moves. 

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