We are rehabbing an property that we will occupy when finished, what parts of the work etc can I deduct or use to minimize tax exposure on the property?
I have one handyman I use alot now as well as in the past that I pay in cash, but we have a written proposal etc. Can I use this, or would I need checks as proof of payment
Thanks
-Terry
The cost of the job is added to your basis. Get a receipt for the cash payments you make.
if you’re going to occupy the property for 2 years or more, your gain is sheltered and your “proof” requirements drop considerably.
keep all your receipts. your personal time cannot be added to the basis.
phatman5 - we had a landscaping company clean the yard of a property we recently bought. We paid $300 + $20 tip to 2 workers that had to move some very heavy rocks from the backyard to the front yard.
We paid cash - I don’t like to give checks to people I don’t know because it has my account number.
The owner promised he would send us a receipt by email. He never did.
We went to Wal-Mart and bought a receipt book (~$2.00). From now on, whenever we make a payment to a contractor/company we will ask them to sign the receipt on the spot.
I am still going to claim the $320.00 we paid as expenses. I wrote a note to my file stating the name of the Company and the owner with the date when we made the payment. I also attached a copy of the ATM withdrawal receipt showing that we took $350.00 out. I do recognize that my support documentation is lacking, but that was the best I could come up with after the fact. Next time I will be better prepared…