How JustAnswer Works:

  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.

Ask jgordosea Your Own Question

jgordosea
jgordosea, Enrolled Agent
Category: Tax
Satisfied Customers: 3013
Experience:  I've prepared all types of taxes since 1987.
3653323
Type Your Tax Question Here...
jgordosea is online now
A new question is answered every 9 seconds

Can I write off the labor paid to someone else to install new

Resolved Question:

Can I write off the labor paid to someone else to install new carpet and or laminate flooring in my rental? How about the materials themselves? The last renters left the carpets a wreck with pet stains, the carpets were 10 years old anyway and the entry tile is loose and cracked all over. How about appliances? Fridge and stove are both broken.
Submitted: 2 years ago.
Category: Tax
Expert:  jgordosea replied 2 years ago.

Greetings,

 

Yes, the labor paid to someone else as well as the materials can be deducted for repairs to the rental property. If you pay more than $600 in one year to an individual you will issue a Form 1099-MISC so it is a good idea to use Form W-9
to get their information when they first work for you.

See Box 7. Nonemployee Compensation for more details.

 

Appliances are a bit different since these are assets that have a useful life of more than one year and you will recover the cost over time by using depreciation of the assets as an expense. For more information and links see Tax Topics - Topic 414 Rental Income and Expenses

 

Please see the information at http://www.irs.gov/publications/p527/ch01.html#en_US_2010_publink1000219017 for the difference between repairs that can be deducted in full as an expense and improvements that have to use depreciation.

 

Please ask if you need clarification.

Thank you.

 

Customer: replied 2 years ago.
Thanks. Just to be clear, the new flooring is considered a repair and not an improvement? We're looking at 4k to do the flooring in the living and dining area and the stairs. Are you saying that entire 4k can be written off? Is that write off done on schedule E?
Expert:  jgordosea replied 2 years ago.

Hello again,

 

I am saying that you can currently deduct the amount for repairs but must capitalize and use depreciation for improvements.

There is not a bright line single factor test to use for determining how much is repair and how much is improvement.

 

From the link above for the difference between repairs that can be deducted in full as an expense and improvements that have to use depreciation:

 

"You can deduct the cost of repairs to your rental property, but you cannot deduct the cost of improvements. The cost of improvements is recovered by taking depreciation (see , Depreciation of Rental Property).

Repairs. A repair keeps your property in good operating condition. It does not materially add to the value of your property or substantially prolong its life. Repainting your property inside or out, fixing gutters or floors, fixing leaks, plastering, and replacing broken windows are examples of repairs.

 

If you make repairs as part of an extensive remodeling or restoration of your property, the whole job is an improvement.

 

Improvements. An improvement adds to the value of property, prolongs its useful life, or adapts it to new uses. Table 1-1 shows examples of many improvements.

 

If you make an improvement to property, the cost of the improvement must be capitalized. The capitalized cost can generally be depreciated as if the improvement were separate property. "

 

Depending on the facts and circumstances, the entire 4K may be repairs or only the portion that restores it to working condition (and does not add to the value, such as an upgrade).

For example, if I had laminate floor and decided to put in oak floor, the repair portion would be the cost to replace the laminate and the improvement portion (the cost of the oak that was more than just replacing laminate) would be an improvement. Had I just replaced the worn laminate with new laminate it would reasonably be all deemed to be repair expense to be currently deducted in full.

 

Please understand that it is only a difference in timing and that you will, eventually, get to deduct the entire 4K cost whether classifying it as either a repair or an improvement.

 

Please ask if you need clarification.

Thank you.

 

 

 

 

Customer: replied 2 years ago.

OK. seems pretty clear that the 2k for carpet and carpet labor is definately a write off since it is replacing other carpet. Not sure on the laminate since it is replacing tile, but it is cheaper than replacing the tile with new tile, we looked into some tile and said forget it, laminate is cheaper. What is your opinion on the laminate portion? I won't hold you to it, but how would you do it? You've done a good job and I will accept the answer after the next response.

Expert:  jgordosea replied 2 years ago.

Thank you for your kind words.

 

A repair is when the replacement does not materially add to the value of the property or substantially extend it's useful life.

If the laminate was less expensive than the tile it does not seem possible that the replacement materially added to the value of the property or that it substantially extended it's useful life and so, to me, it does not seem possible for it to be an improvement. The only reasonable choice seems to be to deduct it all as a repair.

 

Thank you for understanding that this is a discussion of the general rules to be reported by you on your return as applied to all of your facts and circumstances.

 

Feel free to continue our discussion as long as you need to be satisfied.

Best wishes.

 

 

jgordosea, Enrolled Agent
Category: Tax
Satisfied Customers: 3013
Experience: I've prepared all types of taxes since 1987.
jgordosea and 5 other Tax Specialists are ready to help you

JustAnswer in the News:

 
 
 
Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.
JustAnswer.com...has seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Web sites like justanswer.com/legal
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.
 
 
 

What Customers are Saying:

 
 
 
  • I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response... T.G.W Matteson, IL
< Last | Next >
  • I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response... T.G.W Matteson, IL
  • I WON!!! I just wanted you to know that your original answer gave me the courage and confidence to go into yesterday's audit ready to fight. Bonnie Chesnee, SC
  • Great service. Answered my complex tax question in detail and provided a lot of additional useful information for my specific situation. John Minneapolis, MN
  • Excellent information, very quick reply. The experts really take the time to address your questions, it is well worth the fee, for the peace of mind they can provide you with. Orville Hesperia, California
  • Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help. Mary C. Freshfield, Liverpool, UK
  • This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!! Alex Los Angeles, CA
  • Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult. GP Hesperia, CA
 
 
 

Meet The Experts:

 
 
 
  • Wallstreet Esq.

    Tax Attorney

    Satisfied Customers:

    570
    10 years experience
< Last | Next >
  • http://ww2.justanswer.com/uploads/KU/KUMI95/2013-9-30_195031_kumar.64x64.jpg Wallstreet Esq.'s Avatar

    Wallstreet Esq.

    Tax Attorney

    Satisfied Customers:

    570
    10 years experience
  • http://ww2.justanswer.com/uploads/CU/Cuttinggirl/2011-10-29_03719_wcrop2.64x64.jpg Wendy Reed's Avatar

    Wendy Reed

    Enrolled Agent

    Satisfied Customers:

    3052
    15+ years tax preparation and tax advice.
  • http://ww2.justanswer.com/uploads/CATax/2009-08-04_204548_Mark.jpg Mark D's Avatar

    Mark D

    Enrolled Agent

    Satisfied Customers:

    985
    MBA, EA, Specializing in Business and Individual Tax Returns and Issues
  • http://ww2.justanswer.com/uploads/IN/insearchoftheanswer/2013-8-16_0233_attorney.64x64.jpg Richard's Avatar

    Richard

    Tax Attorney

    Satisfied Customers:

    3229
    29 years of experience as a tax, real estate, and business attorney.
  • http://ww2.justanswer.com/uploads/MY/MyVirtualCPA/2012-7-5_44024_cookmegan1.64x64.jpg Megan C's Avatar

    Megan C

    Certified Public Accountant (CPA)

    Satisfied Customers:

    6121
    Licensed CPA, CFE, CMA who teaches accounting courses at Master's Level
  • http://ww2.justanswer.com/uploads/JG/jgordosea/2012-6-7_43138_GordosVeritas.64x64.jpg jgordosea's Avatar

    jgordosea

    Enrolled Agent

    Satisfied Customers:

    2783
    I've prepared all types of taxes since 1987.
  • http://ww2.justanswer.com/uploads/OZ/ozaukeecpa/2012-6-7_193219_Picture1croppedandshrunk.64x64.jpg MequonCPA's Avatar

    MequonCPA

    Certified Public Accountant (CPA)

    Satisfied Customers:

    2231
    CPA, Over 30 yrs experience w/individuals and small businesses. Masters in Tax.