definition of expenses - Landlord Forum thread 361479

definition of expenses by Ted on August 16, 2021 @15:44

I am looking for explanation of how repair expenses are defined by IRS. I've heard lots of folks saying landlords can't expense their time when they personally perform repairs or look for tenants to mention 2 possible areas. IRS Pub 527 states under "Additions or improvements. Add to the basis of your property the amount an addition or improvement actually costs you, including any amount you borrowed to make the addition or improvement. This includes all direct costs, such as material and labor, but doesn’t include your own labor." Fundamentally, it does not make sense that landlord not to be able to write off their own time, given that if they don't make that repair it will be difficult or impossible to rent their property. Also, some repairs are quirky and it would be very difficult to find a person to do it.

[ Reply ] [ Return to forum ]

Re: definition of expenses by Garry on August 16, 2021 @18:21	[ Reply ]

Why are you worrying about this? Are you worried about getting audited by the IRS ? I've been a LL for over 40 years, had a regular job for 37 years, been retired for 10 years, and have only been audited 1 time, back in 1987. Have not been audited since. Unless you make over $200,000 per year, ADJUSTED GROSS INCOME, you will probably never be audited. The current "thing" around the whole country now, is setting a minimum wage of $15 per hour, regardless of what job you are working at, or what state you are in. So why don't you "pay yourself" $20 per hour as a "handyman" when you do various jobs at your rentals, and put those figures down as an expense, along with the parts, and attach each total towards whatever rental it goes to. You cannot pay yourself what the average plumber, carpenter, electrician, painter, roofer, or HVAC person charges , UNLESS you have actually had years of training in those professions, and have the licenses to back them up. You have only a .01% chance of being audited, and if they ever DO audit you, all they will do is deduct the amount you paid yourself for that year, refigure your taxes, and charge you a little more for taxes owed for that year. YOU WILL NOT BE GOING TO JAIL OVER YOUR DEDUCTIONS.

Re: definition of expenses