Most experienced landlords are familiar with the IRS’ rules for depreciating the cost of building upgrades. The best plumbing companies in NYC also konw that instead of deducting the cost of an upgrade when you pay for it, you have to depreciate the cost of the upgrade over as many as 27.5 years. By the time you reach the end of the depreciation period, inflation has eaten away at the value of your deduction until it is nearly worthless. The rules have recently changed.
In 2015, the IRS announced new policies on treatment of de minimis business expenses. Under the new rules, businesses no longer need to determine the expected lifetime of purchases under $2500; with the right statement attached to their tax return, they can deduct the cost of purchase immediately. The new rules are even better for landlords. Property owners can immediately deduct the cost of building upgrades, provided that the total cost of all maintenance, repairs and upgrades is less than $10,000 or 2% of the building’s unadjusted basis. The landlord must qualify as a small business with gross receipts of less than $10 million and a building with an unadjusted basis of under $1 million, and must attach the right statement to their tax return.
These new rules make it a great time to have one of the best plumbing companies in NYC improve your plumbing. A running toilet can cost you over $400 per year, and other leaks which waste water can have similar costs. Fixing leaks and reducing your utility bills puts money back in your pocket more reliably than most other types of investments. Good plumbing also attracts good tenants; the best tenants take drips, leaks and signs of water damage as evidence that you do not take care of the building. These issues can cause good tenants to move.
If you have a plumbing problem to fix, a leak that wastes water or an improvement project to consider, please contact Kew Forest Plumbing. Tax policies are complex and have many exceptions; this article is not tax advice. If you need tax advice, please contact your accountant.