Revision To Tax Return

Hey Gang!

This is probably going to sound pretty stupid, but here goes:

I sold a property and made a sizeable profit. I put $XXX into rehabbing my incoming producing duplex/which is also my residence.

I took another portion of my initial profit and put it into rehabbing a pretty run down new investment property.

Both properties are in great shape now, and bringing postive cash flow.

Problem is, my tax retrun makes it look like I have very low income, especially since I had lots of big expenses and I am self-employed.

Here's the question: I claimed the rehabbing costs for the investment property, but not the duplex/residence, figuring I live here....

Now that I can't get the equity line I was hoping to get, I'm thinking I ought to at least go tidy up my tax return and wait a couple years until it looks better.

Should I go back and file an addendum (or whatever those things are called) to my tax return and make sure I claim the repairs on my duplex/residence as investment property expenses, or will that be flagging my return for the IRS - or am I a dead duck anyway? I filed in May/June.

All opinoions grately appreciated.
Marlene

Comments(3)

  • DaveT28th August, 2003

    Generally speaking, rehab costs are capital improvements and must be capitalized -- even for rental property. You recover the cost of the improvements by taking a depreciation expense.

    At this point, it is best for you to consult a professional tax advisor/preparer who will have access to your complete records.

    Only then, will you be able to receive an informed opinion on the next action to take.

  • SmileyFace6th September, 2003

    I totally agree with Dave T. Rehabing costs should be depreciated over time. You need to get an CPA who understands RT. You will be surprised that not many do.

  • MarleneM8th September, 2003

    Thanks for responding. I have been looking for a CPA who is knowledgeable about RE, but am having difficulty.

    I thought I found one a couple weeks ago, but when she showed up, her $95 per hour fee jumped to $800 for a simple tax return.

    Where can I find a reasonably priced, RE knoweldgeable CPA in San Diego?

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