Maximizing Deductions – Placing Your Property “In Service” – LNK Tax Group

According to the IRS, your property is placed in service when it is both ready and available for rent. If you recently purchased a property you hope to rent out for passive income, this is critical information for you.

You ideally want to have the property “in service” to reap the best tax benefits. Usually, repairs that can be deducted while the property is “in service” will result in a higher tax benefit than from the deduction of the basis depreciation.

Ex. $10,000 basis that is added has to be recovered over 27.5 years, but $10,000 expense gives you deduction right away. On top of that, any depreciation that you take has to be recaptured when you sell. However, repairs are not recaptured.

You can see how making a small mistake could penalize yourself now and many years down the road.

Tax Savings Range:

typically $1,000 to $100,000, depending on the value of the property and repairs made

Our Thoughts:

At LNK Tax Group, we pride ourselves on making sure you have the most amount of money in YOUR pocket (legally, of course). Strategically approaching real estate transactions is a must. Book a free 20 minute consultation with LNK Tax Group and let us help! Don’t make silly mistake that can cost you thousands!

Disclaimer:To ensure compliance with requirements imposed by the IRS, we inform you that any US federal tax advice contained in this communication (including any attachments) is not intended or written to be used, and it cannot be used for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing, or recommending to another party any transaction or matter addressed herein. Always seek advice based on your particular circumstances from an independent advisor.