Tax Guru – Ker$tetter Letter

Q:

Subject: Your Service

I have a couple of questions about Section 179 and therefore I would like to engage your services; how do I do that.

 

My questions are:

In a rental property I own, I put in a new washer and dryer.  Is that a 179 item and if so specifically where do I make the entries on the tax return?

 

I manage my own rental and obviously actively participate and I am interested in understanding the “up to $25,000 in losses”  Part of what I am trying to determine is can any of the rental loss offset regular income?

 

I would appreciate hearing from you as soon as possible.

A:

I wish I could help you; but I already have too many clients to take care of; so we are not accepting any new ones at this time. In fact, we are actually still cutting back on clients, trying to find the right balance of workload, so that I’m not so backlogged with projects.  I have no idea how long that will take.

Unfortunately, we don’t have anyone else to whom we could refer you. If you haven’t already done so, you should check out my tips on how to select the right tax preparer for you.

Both of your questions are very simple and any experienced tax pro should be able to help you with them. 

As is included under the heading of “Nonqualifying Property” for Section 179 on my website is “Property used in connection with furnishing lodging.”  Thus the washer and dryer may not be expensed, but must be depreciated over their appropriate class lives.

The issue of active participation in a rental property has been around since 1986; so any qualified tax pro should be able to discuss whether or not your personal involvement is enough to qualify for the $25,000 net deductible rental loss.

Good luck.

Kerry Kerstetter