Rent discount for maintenance Pros/Cons?

Question

Deanna McCormick · Answer

from day you own and rent you can start taking any maintenance, insurance, utilities, supplies, property taxes, tax prep work, legal fees, off as a deduction on your taxes. You also claim the income,, so for this property 50% is rental, 50% is used by you.. so you can deduct 50% of the above listed on the property,, unless you specifically keep track of separate receipts for just the rental upkeep, supplies.. then you expense that, but utilities, ins, prop tax, is 50%.

I would not continue with the rent concession, I would pay the guy direct for his work, and give him a 1099 at year end for that. or whom ever you have work for you that's not billing you as a contractor.

Tell him your tax advisor has said you can't continue as before but you still want his help.

You are liable for any accident he might have while working on your property, I personally don't hire anyone that doesn't have workmens comp insurance.. so you either add that to your policy or risk an injury he can sue you over and will more than likely take you to the cleaners.   He slips falls, doing snow shoveling, breaks a hip, what ya gonna do.. he falls off a ladder, cracks his back... what ya gonna do..

So either do it yourself or hire Insured workers, or get workmens comp insurance added to your homeowners policy. I have it and would suggest you get the same, it lets me occasionally hire the friend of family to do work. It also covers the owner if you would get injured working on your rental property.

Account Closed · Answer

From my personal experience as a tenant, I paid a set amount of rent, and any time I did any maintenance where I paid out of pocket, I included the receipt in the check I mailed in, with the amount on the receipt deducted from my rent.

For example: the rent was $1995, and I dropped bags of leaves off at the landfill, which cost $8, and purchased seed to fill spots in the yard, which cost $12. That would take $20 off of my rent, so I wrote a check for $1975 and included the receipts in the envelope.

That is all financial, and doesn't depend on the quality of the work. If there are more controversial purchases, have the tenant clear them with you first. For example, before I went and bought a cheap weed wacker, I texted my landlord to see if she would cover the purchase (I am big on having a nice lawn, so I probably would've bought it anyways, but it is always nice to know if she would take it off). She ended up saying yes, on the grounds that it would stay with the house after my lease was up. It's things like that.

If you feel like you'll have good communication with the tenant going forward, I think that's a wonderful way to go!

Thomas S. · Answer

"As long as it works, right?"

Till it doesn't work then you are SOL.

No way in H a tenant would ever be spending money and expecting to deduct it from their rent. If they do not clear it in advance and have my approval they get nothing. They never deduct it from their rent.

Thomas S. · Answer

Do the maintenance work yourself, put the tenant on M2M and raise the rent to full market at $1175.

You are operating a business and need to get serious. Why would you choose to supplement your tenants rent out of your own pocket. You need to get your head around the principals of house hacking. You are already there on site you do not pay someone else to do what you can do yourself.

Margaret Rodriguez · Answer

Account Closed  That's great that you have that kind of relationship with your landlord. I'm not there yet with my inherited tenant. I'm not too sure if I'd ever be comfortable enough for my tenant to maintain and repair my property and deduct from the rent. I'd rather discuss the service and a fair cost, and submit payment. If my rent is $1,000 per month, that is what I'm expecting.  We would have a contract stating such.

If I set a precedent of allowing a tenant to deduct these things from the rent and things go south, things would be more difficult for me in court.

I guess everyone "landlords" differently. As long as it works, right?

Margaret Rodriguez · Answer

@Deanna McCormick  thanks for the info! I'll definitely look into adding WComp to my insurance. I'll be keeping each unit separate as far as maintenance and repairs and so on. I figured it'll make it easier for an accountant to sort through.

@Thomas S.  I agree. I'll be doing most on my own. However, there are things I might not be able to do alone or at all. For example:  snow removal when I'm at work. He's been maintaining the property well so far. If he doesn't perform to expectations, then I release him from duties, but he is still a tenant paying the new rent.   I'll be paying someone, whether it's him or a maintenance company.

@Andrew Johnson  yes, seperate the two. If he doesn't do a good job, then thanks but no thanks and I'm still collecting a little higher rent. I'd like to do 6 month lease for now. M2M in this area doesn't allow me to collect 2 months security, but 6 months or longer does. So 6 months to start and we'll see if we renew.

Great info! I really appreciate it. Any feedback on my ideas or suggestions are always welcome.

Rent discount for maintenance Pros/Cons?

Most Popular Reply