I know you can offset it with a capital loss, but if someone spent enough improving rental property to cause a loss on the property for the year, would that also offset it? If this is possible, what other things might be kinds of "beneficial" capital losses? Thanks
Andrew
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The improvements on a rental property usually cannot be deducted all at once, but need to be depreciated over a number of years. This depreciation varies deping on the type of improvement, i.e a new roof = 12 years. New Carpet = 4 years.
Capital gains are treated very differently, as these are subject to an 18% tax liability cap.
If you have assetts such as these, and you come to Yahoo! Answers with questions like these, you really need to spend some tax deductable money on an accountant.
PS... I assume you are in the USA ?
chatsplas
the direct offset to capital gains are capital losses,
that said, your tax return bottomline considers many different factors, including the loss or gain on your rental property, ordinary income, deductions, etc. . . . .improvements to your rental property are probably capital improvements, which are depreciated over the life of the property, not taken in one year
recycle b
If you own any other stocks that are losing money, consider selling them.
and taking a capital loss. That would be used to offset your capital gains. But, after selling your losing stock(s), you need to wait at least 30 days to buy it back to avoid the wash sale rules.
Busy Guy
it is important to check with your accountant. The capital gains and losses on Stocks are considered Passive gains and losses. I believe it is different on rental properties and not passive since it's a business loss.