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QUESTION: I am a Section 8 Landlord. I have heard there is another Landlord workshop coming up soon. What I want to know is why should I continually rent my home under Section 8, receive less money and incur costs for repairs when the tenant leaves?
ANSWER: As far as taxes go, repairs to rental property are always better than improvements. The entire cost of a repair is deductible in a single year, while the cost of an improvement to rental property may have to be depreciated over as much as 27.5 years. Under the new tax laws, the cost of repairs to rental property (provided the repairs are ordinary, necessary, and reasonable in amount) are fully deductible in the year in which they are incurred. Good examples of deductible repairs include repainting, fixing gutters or floors, fixing leaks, plastering, and replacing broken windows. To ensure your expenses will constitute as a repair, not an improvement read Tips for Maximizing Repair Deductions .
QUESTION: I own several rental properties, but I cannot do the repair work myself and often have to hire someone. I am just one individual and cannot really afford to hire someone on payroll full time to maintain the properties. I do make some money from the rentals. I feel like I am in a catch-22. Is there any help for me?
ANSWER: Whenever you hire anyone to perform services for your rental activity, you can deduct their wages as a rental business expense. It does not matter whether the worker is an employee (for example, a resident manager) or an independent contractor (such as a repair person). When you hire an independent contractor, you don't have to withhold or pay any state or federal payroll taxes on the independent contractor's behalf. This is one of the great benefits of hiring independent contractors. Find out tax rules that apply to landlords who hire independent contractors to help them with their rental business, see Hiring Independent Contractors for Your Rental Activity.
QUESTION: I saw your segment on Evictions. I empathize with the homeless, but it's just too costly to house people and then pay all kinds of attorney fees and court costs to get them off the property. I can't recoup those costs. Where is the empathy for us?
ANSWER: We most certainly understand your frustration. You can deduct fees that you pay to attorneys, accountants, property management companies and other professionals. You can deduct these fees as operating expenses as long as the fees are paid for work related to your rental activity.
- · Most small landlords can deduct up to $25,000 in rental property losses each year.
- · A special tax rule permits some landlords to deduct 100% of their rental property losses every year, no matter how much.
- · People who rent property to their family or friends can lose virtually all of their tax deductions.
If you didn't know one or more of these facts, you could be paying far more tax than you need to. Click here for more information.
There's also a Landlord Workshop on Friday, Mar. 23rd at the Multi-Purpose center at 2001 Moeling St in Lake Charles.
Disclaimer: The information furnished in this answer is general and may not apply to some situations. All legal situations are unique. No one should rely to their detriment on these answers. Anyone with a potential legal problem should seek the advice of a licensed attorney before taking any action or inaction. The answers provided are not intended to be specific legal advice and no attorney-client relationship is created between the SWLA Law Center and the viewers of KPLC-TV.