New Landlord Questions

[Account Closed]

Hello, I am a new landlord with my tenant moving in a few weeks. I bought my home in April 2011 and have been making improvements to the home without a renter since then. I have a separate checking account for all expenses related to the home and its improvements. I am going to be using QuickBooks 2013 to track my rental income and expenses going forward. My question is should anything be done about the improvements I have made to the home in the past 2 years? Should they be factored into the value of the home or should I just ignore them and just account for the expenses going forward, since the home was not being rented?

[Jon Holdman]

When you sell the house your basis is decreased by the amount of depreciation taken or allowed, whichever is greater. You they pay tax on the net sales price less the basis. Tax is a combination of tax on unrecaptured depreciation (currently capped at 25%) and capital gains (currently 15% if you've held for at least a year.) So, if you don't take the full amount of depreciation allowed, you are hurting yourself when you sell.

Your labor isn't counted. Its only the money you've actually spent. If you have receipts for the money you've spent you would use that.