Sunday, April 2, 2017

Can I Deduct Home Warranty Costs?

No. BUT you can if it is on a property you own that generates income. It would be deducted under Other Expenses.

Reference:
http://tophomewarranties.com/understand-tax-deduction-in-home-warranty/

Saturday, April 1, 2017

I Finished My Basement and Rented it As An Apartment. Are My Expenses Deductible?

No.  The expenses to improve your basement for a rental unit would be considered a capital improvement, in other words the finishing of your basement adds to the value of your home so these expenses are not immediately deductible.

So What Should I Do?

1) THE HARDER WAY: You can deduct the depreciation of these capital improvement expenses at %3.63 each year over 27.5 years BUT upon sale of the property, this depreciation will be recaptured and taxes on the total expenses will then be collected .

2) THE EASIER WAY: Save all the receipts for labor and materials you used for finishing the basement and add these to the cost basis of the home when you go to sell it. This will then increase the initial cost of your home which will decrease the taxable income.


Is There Anything I Can Deduct?

You can deduct any costs associated with utilities or maintenance of the rental space. This would include electricity, water, garbage, any kind of maintenance to the pre-existing structure, etc. This would be deducted in a Schedule E where you post your rental income.

REFERENCE:
http://homeguides.sfgate.com/tax-deductible-finish-basement-apartment-rental-59972.html