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Scenario

I need to do 5k worth of home improvement in the form of replacing an A/C and a furnace. The property is a rental and I'm probably going to break even this year.

On the other hand, I have another business LLC that has done quite well. Because the business LLC is a pass-through, I'm hoping to deduct the home improvements from taxable income, because all the money boils down to me at the end of the year.

Is there a legal way to do this while being able to reap the tax benefits?

Simplified

  • House: Needs 5k & doesn't have it.
  • Business: Has surplus & is going to get over taxed.
  • Me: Wanting to take 5k from the business and give it to the house, deducting the property updates from my taxable income.
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    Is your current AGI low enough that losses from the rental are allowed? For couples MFJ, the phaseout is from $100K to $150K. Above $150K, all losses are carried forward. – JoeTaxpayer Jul 11 '18 at 17:30
  • @JoeTaxpayer Good question, I hadn't thought of that. I'm single and my AGI will hopefully be < 50k as I'm putting 50-100k back into the business that is doing well. – Jacksonkr Jul 11 '18 at 18:50
  • @Grade'Eh'Bacon - didn’t new US code enact full first year write-off? – JoeTaxpayer Jul 11 '18 at 19:35
  • @JoeTaxpayer I was not aware of this - it seems my US tax knowledge is approaching full obsolescence, so I should probably keep my nose out of it from now on! – Grade 'Eh' Bacon Jul 11 '18 at 19:37
  • Join the club! A lot of changes to sift through. – JoeTaxpayer Jul 11 '18 at 20:07
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My understanding is that the new tax code will permit full expensing. No need to write off a purchase such as heating system, roof, carpet, etc, over its useful life. The other business really has nothing to do with this. The real estate loss, up to $25K/yr for the non professional, is deducted against your other income.

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