EP139: It’s Tax Time: Repairs vs. Improvements – Interview with Tom Wheelwright
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Many people despise tax season, and when you are a real estate investor, there’s an extra layer of complexity to worry about. Although the tax benefits of real estate investing are enormous, it’s important to understand how the tax law works in order to reap those benefits appropriately.
On today’s show, we’re welcoming back our favorite accountant, Tom Wheelwright! Tom is here to share the important distinction between repairs and improvements on a investment property. We’ll also talk about finding the right tax advisor, and Tom is sharing a FREE copy of his new report. Don’t miss episode 139 of Investing in Real Estate!
More About This Show
Accounting for repairs on a rental property can be incredibly complex. There is so much misinformation floating out there on the internet, so today we’re calling in a professional! Tom Wheelwright is one of the most knowledgeable tax accountants in the business.
Tom explains that recent regulations have made distinctions about repairs and improvements very clear. Within the tax code, repairs can be written off immediately, whereas an improvement must be capitalized over time.
Another situation to consider is when an investor is first starting out. The rehab phase counts as a start-up cost, because the investor is not yet in business. Start-up costs have their own rules within the tax law, so you should consult your accountant about these laws.
A capital improvement is a different distinction. This is a genuine improvement from when the property was acquired—an improvement that increases the value of the property. Tom gives the example of adding a carport or bathroom to the property. He explains that routine repairs done during a tenant turnover are not improvements, because they do not improve the property from its initial condition.
On today’s show, Tom is sharing more about the differences between repairs and improvements. He’s sharing specific details about IRS regulations, what to anticipate from a cost segregation, and more. Please join us for episode 139!
Additionally, Tom is sharing a free copy of his new report with you! It contains powerful new strategies to legally reduce your taxes. Click here to download Five Simple Steps to Eliminating Taxes.
If you’re ready to begin building a passive income through rental real estate, book a FREE call with our team today. We’re ready to talk about your goals and want to help you learn more about earning legacy wealth for you and your family.
On this episode you’ll learn:
- What are the three variations of a cost segregation?
- What is a necessary cost of your real estate business?
- What is a “betterment?”
- What is the exception to the capital improvement law?
- How can you find an accountant who is knowledgeable about real estate?
- And much more!
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