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Re: Carpet and paint - Landlord Forum thread 151019

Re: Carpet and paint by Anonymous on February 8, 2008 @00:13

                              
We do not depreciate carpet or appliances because in the sense of real dollars the write-off is nominal. The reason for the 50% replacement is because the tenant NEVER (maybe once) cleaned the carpet for seven year and purposely ruined it! The tenant had majority use of the carpet from the 2nd to 8th years. The carpet would have remained in good condition with the exception of the high traffic areas that were matted and contained food particles. The same carpet in other units lasted 15 years.
We have a grade of carpet on the steps of the unit that looks brand new and it's 15 years old. Should this carpet be devalued simple because of the age or should quality not count for anything?
We do not depreciate appliances for the same reasons. We purchase quality major appliances and write-off the warranty (if any). Major appliances may have a life span of only ten years, but in actuality appliances can last for 20+ years with good maintenance and good tenants.
For the record, our tenants tend to know more about finances than most and never debate their misuse or neglect because of the quality and attention provided to the unit and their tenancy.
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Re: Carpet and paint by accountant (USA) on February 8, 2008 @01:14 [ Reply ]
"We do not depreciate carpet or appliances because in the sense of real dollars the write-off is nominal."

Nominal!!! You really haven't a clue. Between the depreciation, the repairs, and other deductions, I write off nearly all of my rental income. Last year I made many tens of thousands of dollars in rental profit, but I am paying tax on just a couple thousand because of these deductions! (Improvements made at strategic times can be made to help your tax situation.) Open a home office and with those added deductions you can show a negative income and pay no tax on this money. (Of course I do have to show a profit every few years for the IRS.) I suggest an appointment with a tax accountant. You are paying taxes on things you don't need to.

And yes, the carpet can be devalued simply because of its age. If a tenant ever takes you to court and shows that you are attempting to charge them for 15 year old carpet or to charge them a disproportionate value, the judge may rule that you are acting in bad faith and fine you up to 3 x the damages withheld.


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