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I currently own a horizontally split duplex with Unit 1 being Floor 1 and Unit 2 being floor 2 and 3.

I live in Unit 1 and rent the other unit.

We are considering replacing the windows on only the top 2 floors this year. (over 40 windows total in the house)

My question is next year if we try to deduct the full price of the window replacement is this going to raise a red flag with the IRS?

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How is this different from any other repairs on your rental property? You definitely need receipts in case IRS asks questions but so do you for any other rental repairs/improvements. I am no expert on IRS flag raising stimulants but this does not strike me as anything out of the ordinary.

It will be a red flag because windows should be capitalized and depreciated over 27.5 years. It's no problem to allocate them 100% to the rental. You will just need to be careful of how you enter it into your tax software. If your rental depreciation is being calculated by taking the full value of the property and multiplying by 50% for the rental then if you did it the same way you would only get half of the deduction. You will want to make sure the windows are allocated entirely to business use.

CheapBustard said:   How is this different from any other repairs on your rental property? You definitely need receipts in case IRS asks questions but so do you for any other rental repairs/improvements. I am no expert on IRS flag raising stimulants but this does not strike me as anything out of the ordinary.

Ok, I guess I will just be extra careful that the receipt states that the windows were only on the top 2 floors of the house. Hopefully I can get the specified.

you deduct the entire cost of the windows, less the percentage of square feet that is not used for business purposes, in other words, your unit. so if the whole building is 1/3 yours and 2/3 rented, then you will end up deducting only 2/3. But you can't deduct all of it right away, you do it slowly over 30 years my friend.



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