Rental Property Tax Deductions Estimating Repairs on a Property Case 3 months ago   10:43

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Rental Property Tax Deductions

My mentor in real estate investing once said "if you invest in real estate and you're paying taxes then you're doing it wrong." In this video we are walking through ten tax deductions that you can take today if you're a real estate investor.

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Comments 205 Comments

Joe G
Can i depricate my rental property that hasnt been rented in the tax year? Its s dingle family house
BIANCA Ramos
How much of the 40% from the freedom number really go back into your pocket?
Haru Koyama
What if an investor has no one to pass their real estate property to? What would be the best course of action to benefit from the real estate asset saving?
Haru Koyama
Your accountant is correct... Below is an great example I found:


The basis of property you inherit is usually the property’s fair market value at the time the owner died. Thus, if you hold on to your rental property until death, your heirs will be able to resell it and pay little or no tax—the ultimate tax loophole.

Example: Victoria inherits her deceased parents' home. The property’s fair market value (excluding the land) is $300,000 at the time of her uncle’s death. This is Victoria’s basis. She sells the property for $310,000. Her total taxable profit on the sale is only $10,000 (her profit is the sales price minus the home's tax basis).

The basis of a home or other property you receive as a gift is its adjusted basis in the hands of the gift giver when the gift was made.
Haru Koyama
Here is an great example I found on Nolo:


Viola bought a small apartment building and sold it six years later for $300,000. Her starting basis was $200,000. During the time she owned the property she took $43,000 in depreciation deductions and paid $13,000 for a new roof (an improvement). Her depreciation deductions reduced the property's basis, but the roof improvement increased it. Her basis at the time of the sale is $170,000. Viola calculates her taxable gain on the property by subtracting her adjusted basis from the sales price: $300,000 – $170,000 = $130,000.

As you can see, when you sell your property, you effectively give back the depreciation deductions you took on it. Since they reduce your adjusted basis, they increase your taxable gain. Thus, Viola’s taxable gain was increased by the $43,000 in depreciation deductions she took. The amount of your gain attributable to the depreciation deductions you took in prior years is taxed at a single 25% rate. Viola, for example, would have to pay a 25% tax on the $43,000 in depreciation deductions she received. The remaining gain on the sale is taxed at capital gains rates (usually 15%, 20% for taxpayers in the top tax bracket).

So basically there is no benefit to depreciate property. Uncle Sam will get you either now or later. If you leave all the property to your heir, they will be burden to heavy tax later on, that they might as well not take it.


I do not see the benefit or anyway that you can just hold the property forever. Eventually everyone will die, all asset will need be transfer to someone else. That someone will be burden to all the tax, unless the successor just donate all to charity like my uncle did.
EAGLE___EMPIRE
If I have a property that Im barely clearing the mortgage and havent done much in repairs so far, should I file my taxes with the rental property, or just skip this, low key :)
Haru Koyama
But if you don't pay tax now. You will need to pay later when you sell the house. When you sell the house we are required to pay back the deduction portion taken before...

We pay either now or later on.

Which way is better. If one is selling the house in 2 years?

By paying later on we have more cash flow.
Catherine S
Hello, does this apply if you are renting rooms in the house that you live in? Or is that different? Thank you!
Emma & Remy’s Story
Can I as an investor of a rental property write off expenses for initial rehab of a house and the contractor’s work on the house? Your videos have been extremely inspiring and informative. Hope to get out of the rat race soon.
Tommy Banks
Excellent Information!
Abel Bekele
Can you do a new version of this topic with the new Trump Tax?
dick weasel
Casual losses far into a somewhat nebulous category. The IRS allows a casualty loss to go to the lowering of the cost basis of the property rather than a straight deduction so that when you see the property there is less of a taxable gain. Some casualty losses are allowable but this is a nuanced area. Claiming a home office is also nuanced in that it reduces the amount of property taxes on your own home that you can deduct.
dick weasel
Replacing a roof is not an expense, it is an improvement that extends the life of the property and a s such must be depreciated of 27.5 years and not expensed in one year. A small portion of the roof can be repaired and be claimed as an expense. Ithe IRS ruling is that if any work restores the property or extends the usefull life of the building, it must be depreciated not expensed. Meals can only be expensed up to 50%
retycoon100
CPA RECOMMENDED IN ILLINOIS COOK COUNTY?
Noureddine El Alam
Hey, Clayton. I enjoy your videos. I don't think you can deduct interest on home equity line of credit.
Chris Delgado
Repairs are deductible only if the house is rented with tenants living there.
Tom Cisso
Just started renting. Your video is extremely helpful. Concise and to the point. I like that. Keep it up, you're doing a great job!
matthew conner
IM a landlord 🏡in Las Vegas

Thx for the 411.
Jordan Kaufman
I can't get over people disliking videos like this. Its useful to you great, if not go watch something else... but 43 people felt the need to dislike this video. Very lame!
Johann-Sebastian Lansky
So I just bought my second home , but had to make it my primary resistant due to my finances. And will live in the property of course for at least the first year.
However I have two renters lined up, to off set the mortgage.

Should I still create a LLC and treat the property part that I rent as a rental property,
or lets say can I ?

Awesome videos btw
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Estimating Repairs on a Property Case Rental Property Tax Deductions 3 months ago   30:24

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Than Merrill of A&E's Flip This House takes you on a walk through of a house he just purchased and shares how he completes cost estimate repair.