renting appliances

[Heg]

If I rent an appliance for one of my rental properties is the rent that I pay tax deductible?
I am putting a washing machine into a small one bed unit and it occurred to me today that it may be more prudent to rent rather than buy for the simple reason that if the thing goes wrong or breaks down then I don't have hefty repair bills to pay.

[xris]

If I rent an appliance for one of my rental properties is the rent that I pay tax deductible?
I am putting a washing machine into a small one bed unit and it occurred to me today that it may be more prudent to rent rather than buy for the simple reason that if the thing goes wrong or breaks down then I don't have hefty repair bills to pay.

When you use a lawnmower man are you buying him or renting him?

If he breaks down are you landed with the fixing his motor, nuts and blades?

Is the money you pay him deductable for tax?

xris

[Heg]

A simple - "yes Heg, it is tax deductable" would have done. Maybe you would have preferred it if I had entitled my post 'this may be a stupid question..."
Having recently had a VERY detailed conversation with my accountant over 'repairs and maintenance' vs 'capital improvements' , I thought that this may be a good question to post here. I could simply have asked my accountant the same question and therefore not have had to endure yet more of your dripping sarcasm, but one of the points of the forum is to post questions that may result in answers that may ALSO BE OF HELP TO OTHERS.
Are you a school teacher by any chance?

[muppet]

School teachers use much simpler language like yes or no.

[Traff]

Here we go again!!!

[Heg]

School teachers use much simpler language like yes or no.

Maybe so. However in asking xris if he or she was a school teacher I was referring to the old northern (pom) saying, "them what knows, does. Them what doesn't ,teaches"

[BusyLizzy]

Well, I thought it was good question. And I'm still interested in the answer...

[Glen]

If I rent an appliance for one of my rental properties is the rent that I pay tax deductible?
I am putting a washing machine into a small one bed unit and it occurred to me today that it may be more prudent to rent rather than buy for the simple reason that if the thing goes wrong or breaks down then I don't have hefty repair bills to pay.

Personally in this case, I would just buy the machine.

Washing machines are cheap enough, and I wouldn't think that with it going into a one bed flat that it would get 'overused'.....and they're reasonably cheap to repair.
Your rent increase for the machine should easily cover any problems .....and yes, it is tax deductable.

We have washing machines in some of our IPs, and they very rarely are an issue.

[xris]

Hello Heg,

First, I did not think your question was at all stupid so I regret that my sarcastic reply gave that impression.

A school teacher? Well, perhaps I should not go down that path.

Now, back to the posed question.

Yes, it is deductable, but in this case, like Glen, I doubt there is much benefit to be gained from renting over buying outright.

Your question does open up several lines of discussion, all undoubtedly of benefit to other viewers here.

1/ What is an expense and what is a capital improvement. How should the two be accounted for in the books?

2/ Pitfalls investors encounter when they muddle up the two.

3/ The actual cost of buying outright at the start against paying over time or even leasing or renting.

4/ Why is leasing common with commercial and not with residential?

5/ The many advantages in understanding R&M properly.

xris

[Bodmin]

Buy it

We bought a basic one for one of our properties with a five year extended warranty. The warranty has been used once so has paid for itself. With the depreciation it will be worth almost nothing at the end of the five years so if it needs replacing it is not an issue. The cost of renting seems to be very high when compared with what we have done.

Cheers

[Glen]

We bought a basic one for one of our properties with a five year extended warranty. The warranty has been used once so has paid for itself. With the depreciation it will be worth almost nothing at the end of the five years so if it needs replacing it is not an issue. The cost of renting seems to be very high when compared with what we have done.

Cheers

I agree!...You would probably find that even on a weekly scenario alone, that renting/leasing a machine would work out more expensive......and you would have nothing to show for it at the end.

[Heg]

Hello Heg,

First, I did not think your question was at all stupid so I regret that my sarcastic reply gave that impression.

A school teacher? Well, perhaps I should not go down that path.

Now, back to the posed question.

Yes, it is deductable, but in this case, like Glen, I doubt there is much benefit to be gained from renting over buying outright.

Your question does open up several lines of discussion, all undoubtedly of benefit to other viewers here.

1/ What is an expense and what is a capital improvement. How should the two be accounted for in the books?

2/ Pitfalls investors encounter when they muddle up the two.

3/ The actual cost of buying outright at the start against paying over time or even leasing or renting.

4/ Why is leasing common with commercial and not with residential?

5/ The many advantages in understanding R&M properly.

xris

Excellent! You see you CAN do it xris.
This was the kind of answer I was looking for. In the UK it used to be very common to rent appliances such as TV and video recorders (this was before DVD days). My Dad only bought his first TV about 5 years ago. The idea being that if it went wrong or simply because a bigger and better model came out , then you just swapped yours for a new one. It had never occured to me that this would be a good idea for our investment properties until we drove past Mr Rentals yesterday. Hence my post.
So - who out there is buying and who is renting when it come to appliances?
Glen makes a good point re wear and tear in a one bedroom place, but what about in a larger property? And tenant do have a tendency to be harsher on appliances than normal (the 'it's not mine so who cares' mentality I suppose)
Bodmin reckons the cost is much higher but if it is deductable, then maybe it is worth it?

[Glen]

I wouldn't necessarily put a machine (or any other appliance etc) in for a tenant 'willy-nilly',...but, if one was requested, then you work that into the equation of each individual situation.

If supplying something that was asked for, meant a happier, more respectful tenant, paying a higher rent, and on a longer lease, then so be it

[Bodmin]

Some sums

We did look at this but when you look at the maths it does not stack up. I have just rechecked the figures on the net to make sure nothing has changed.

To rent the smallest machine from a well known firm over five years $2,444

To buy a similar machine, same size load, with a five year warranty $800.

So to my mind it is a simple answer.

Cheers

[Glen]

We did look at this but when you look at the maths it does not stack up. I have just rechecked the figures on the net to make sure nothing has changed.

To rent the smallest machine from a well known firm over five years $2,444

To buy a similar machine, same size load, with a five year warranty $800.

So to my mind it is a simple answer.

Cheers

Good work!