Maintenance Or Remodeling Expense On Tax Return?
Hello,
In the past year I have purchased and completed light renovations on ~4 properties. Most of the repairs were required to attract the higher end tenants I am seeking. I am trying to decide what I can list as maintenance on my tax return and what I must count as remodeling. It is very beneficial for me to expense as much as possible as maintenance so I can deduct it this year. Everything else must go on to remodeling which is done by adding to the basis of the property. I plan on using a 1031 when I do sell so this is not terribly beneficial.
For those of you with experience, what have you generally found is acceptable to label as maintenance versus remodeling?
Thanks
Jeff
When your renovation is done to make the property rentable, all of your renovation is a capital improvement. You add the rehab cost to your basis and recover it through depreciation.
AFTER you have placed the property "in service" as a rental, you can expense mainentance and repairs, but not before the property is in service.
Thanks - I read the tax code last night on rental property and it cleared this up, and several other things I thought I was knowledgeable on but wasnt.
Jeff
Jeff,
I think we all say that at one time or another!
Jim