All Forum Posts by: Mike G.

I have been reading mixed opinions on this question in multiple forums and wanted to see if anyone had any references or could provide for further clarity.  

According to IRS regulations, "Under the final tangibles regulations, you may elect to apply a de minimis safe harbor to amounts paid to acquire or produce tangible property"

My understanding is that tangible property includes both personal and real property, but then in other discussions, people reference this election is only for "tangible personal property".  Am I understanding the definition of tangible property incorrectly in regards to the IRS regulations or can de minimis safe harbor apply to real property as well?

Thank you @Ashish Acharya!

I was getting confused, because in some sources I saw 'tangible personal property' and then in others just 'tangible property', so the 'personal property' was throwing me off.

I have a follow up question: What exactly do they mean by 'producing' a UOP?

Hi BP,

I recently incurred significant expenses for the exterior of one of my properties, and am requesting your assistance in understanding what I may be able to deduct in the current year.  I would classify each of the below items as either a betterment, adaptation, or restoration, so it would fall under the 'improvements' side of the 'repairs vs improvements' argument.  However, I am hoping to gain clarification as to whether any of these expenses (improvements) would be currently deductible under any of the safe harbor elections.

Here are the facts:

• The basis of the property is $115,000, and is currently in service (tenants are in the property)
• Separately invoiced items:

1. Replace warped boards on deck and house= $350

2. Remove/replace gutters and downspouts= $1100

3. Remove/replace exterior doors= $2100

4. Remove/replace garage door= $1000

5. Remove/replace all windows= $2500

6. Paint entire exterior of house= $2400

7. New stove= $400

TOTAL= $8460

• Here is my logic:

1. safe harbor for small tax payers. I don't think that it falls under the safe harbor for small tax payers, since it exceeds the annual expense limit (2% of $115,000= $2300), and because I must count everything spent during the year, if I exceed the $2300 (which I do), I cannot count any of it towards this safe harbor.  In this case, $8460 exceeds $2300, so it renders me unable to use this safe harbor.

2. De minimis safe harbor.  The only item that would be considered personal property is the $400 stove.  Since the $400 stove is less than $2500, then I may elect to use this safe harbor and deduct the cost of the stove.  Can I count any of the other items under the de minimis safe harbor election? I don't think so.

3. Routine maintenance Safe Harbor. Would not fall into this, as they were betterments and restorations.

Based on the above, must I capitalize everything other than the new stove?

Your help is very much appreciated!

@Michael F. I am sorry to hear about your experience.  Just curious, I think I remember reading a previous post that Elite would pay rent if they couldn't get a tenant in the property.  Has this been the case for you as well since it has been vacant for awhile now?

Thanks! I really appreciate the help. I will make sure to use your device the next time the situation arises.

We recently started a direct mail campaign, and ran across the issue of how much personal information to provide to people. In one phone call, they asked for my full first and last name, but I did not want to provide it to them, as I wasn't even sure that they were going to let me see the property. Is this something I am being overly paranoid about, or should I hold firm and not provide them with a last name.

We are looking to purchase a property in which the sellers are requiring the sale to happen on or before December 30th. However, we just recently discovered that the lease for the tenants in place ends December 31st, one day after closing. What recourse, if any, do we have to ask the seller to give 30 days notice (now) and not renew the lease since we do not own the property?

Otherwise, does it automatically go into a holdover/month-to-month lease agreement? If so, it seems like the earliest we could give the 30 days notice for them to leave the property would be December 31st, and we would not be able to take possession of the property until January 31st at the earliest assuming everything goes as planned?

Is this common? I would assume typically the seller would either let the lease run out before selling, or it might be sold with tenants in the property with a month or so left on the lease (giving us time to act, while letting the lease run its course), rather than just 1 single day.

Just a quick follow up. We asked to walk away and cancel opposed to extending our contract further. They have agreed to refund us our earnest money.

Thanks for all the responses!

Thanks for the advice.  I only got a vague notice that the house was broken into weeks ago and they are repairing and replacing everything, causing the delay in closing.  Even though no police report or insurance claim was filed, are they required to disclose the full list of items needing replacement/repair to me?

Hello and thank you in advance for your advice.

To summarize, we were supposed to close early June and I hadn't heard any updates so I reached out to the seller. He just now informed us the house was robbed and they had been trying to repair and replace damage without filing an insurance claim. He wants to close soon but I am hesitant on what to do. How should I approach this? Will I be allowed another inspection and/or can I back out and receive a refund on my earnest money?

Thanks,

Mike