Owning a rental property comes with upkeep headaches. Roofs, HVAC units, lighting systems—they all break down and require replacement eventually.

And then you have the IRS.

Yep, and you are not happy at that thought, but you are going to thank the IRS for what you learn in this article.

Before the IRS got into this area, getting a new roof or replacing an elevator did little for your taxes. For example, once you replaced, say, a roof, you were stuck capitalizing and depreciating the new roof—and you continued to depreciate the old one.

But thanks to the IRS, if today you’re thinking about replacing a roof (or other structural component in a building), you can claim a tax deduction equal to the remaining basis (undepreciated cost) of that roof you replaced.

That alone is a big deal. And, sadly, it’s often overlooked.

If you overlook the write-off of the old roof, you also pay taxes on the depreciation you claimed on the old roof. So, by not taking advantage of the IRS rule on writing off the old roof, you shoot yourself in the foot twice.

Let’s examine the benefits of getting this correct. ... Log in to view full article.