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So this is interesting, under Section 179 of our tax law real estate investors can deduct upfront the entire cost of improvements, subject to a limit. To my understanding this means that if you buy a refrigerator for your rental property, you can deduct all of it, whereas before you had to depreciate it over time.
However, it seems that this provision in the tax code only applies to people who's active business is real estate investing. That means you have to be actively involved, and not just be a passive owner with a property manager.
However, if real estate investing is an active business for you, you can deduct "personal property" used in the business. This includes equipment and property that is used off site to run the business, such as cell phones, printers, desks etc. used in your property management office.
The new tax law also seems to have increased the limits for Section 179. The maximum allowable deduction has been increased to $1 million if you purchased 2018 when the Tax Cuts and Jobs Act went into effect. This limit also gets adjusted annually for inflation.
The phase out also has increased. The deduction limit starts at $2.5mm now vs $2.0mm, and this is also adjusted annually for inflation.
Remember however that if you sell it without doing a 1031 exchange, and you've been depreciating the property and using Section 179, you'll be subject to depreciation recapture at normal income tax rates vs capital gains rates.
However, it seems that this provision in the tax code only applies to people who's active business is real estate investing. That means you have to be actively involved, and not just be a passive owner with a property manager.
However, if real estate investing is an active business for you, you can deduct "personal property" used in the business. This includes equipment and property that is used off site to run the business, such as cell phones, printers, desks etc. used in your property management office.
The new tax law also seems to have increased the limits for Section 179. The maximum allowable deduction has been increased to $1 million if you purchased 2018 when the Tax Cuts and Jobs Act went into effect. This limit also gets adjusted annually for inflation.
The phase out also has increased. The deduction limit starts at $2.5mm now vs $2.0mm, and this is also adjusted annually for inflation.
Remember however that if you sell it without doing a 1031 exchange, and you've been depreciating the property and using Section 179, you'll be subject to depreciation recapture at normal income tax rates vs capital gains rates.