what do with expenses on house

[TrustUser]

What is the name of your state (only U.S. law)? california

hi, my tenant died. and i am selling the house, or at least attempting to do so. i could also rent it out for awhile

i am putting about 15K into it, to get it fixed up

assuming i make a sale, should this money be expensed as part of the current year's expenses ?

or should it be capitalized, and deducted from the sale of the property, when figuring out my basis ?

and what happens if i sell it next year, which seems much more likely than closing any sort of escrow by year's end ?

 

[LdiJ]

What is the name of your state (only U.S. law)? california

hi, my tenant died. and i am selling the house, or at least attempting to do so. i could also rent it out for awhile

i am putting about 15K into it, to get it fixed up

assuming i make a sale, should this money be expensed as part of the current year's expenses ?

or should it be capitalized, and deducted from the sale of the property, when figuring out my basis ?

and what happens if i sell it next year, which seems much more likely than closing any sort of escrow by year's end ?

You treat the remodel as a depreciable asset if you continue to rent the home out, or you add it to basis for sales purposes. Selling a rental property can be complicated for tax purposes. There is not just the issue of selling a capital asset but also the issue of depreciation recapture. If you do not normally use a tax professional, you might want to consider using one for the year in which you sell the property.

 

[HRZ]

Repairs even significant repairs ( not remodels ) are most likely expenses in the current year . I would suggest you lay out your options, several of fhem, on paper first. Often it makes sense to keep a property in rental service for now ....

Note if you mix repairs with remodels you are likely required to treat it all as addition to basis ...unless you are quite careful to separate them ..I would suggest separate contractors

 

[LdiJ]

Repairs even significant repairs ( not remodels ) are most likely expenses in the current year . I would suggest you lay out your options, several of fhem, on paper first. Often it makes sense to keep a property in rental service for now ....

Note if you mix repairs with remodels you are likely required to treat it all as addition to basis ...unless you are quite careful to separate them ..I would suggest separate contractors

I am sorry but most of that is nonsense. Particularly the notion that someone should use separate contractors when doing a combination of repairs and remodeling.

 

[Taxing Matters]

What is the name of your state (only U.S. law)? california

hi, my tenant died. and i am selling the house, or at least attempting to do so. i could also rent it out for awhile

i am putting about 15K into it, to get it fixed up

assuming i make a sale, should this money be expensed as part of the current year's expenses ?

Improvements are generally additions to basis to the property. That would result in reducing your capital gain on the sale. Routine repairs are generally deductions against the rental income. I suggest you start by reading IRS publication 527, which covers most of the tax issues for residential rental properties. You’ll find that publication here:
https://www.irs.gov/pub/irs-pdf/p527.pdf

As far as the sale of the property goes, two helpful IRS publications are Publication 544, on the sale of assets, and 551 on basis. These are found here:
https://www.irs.gov/pub/irs-pdf/p544.pdf
https://www.irs.gov/pub/irs-pdf/p551.pdf

 

[HRZ]

Agree....read pub 527 ....and lay out your various options ....in many a small owner situation Rental loss ( due to repairs or other expenses ) is deductible ...but do the math as to your fact pattern.

IF you commingle repairs on the same bill with improvements you may have a major problem to separate them later .

What you think is an improvement or a repair may not be what matters as to the regs ...read carefully and get some quidance .

 

[TrustUser]

thanks for the replies

the most expensive item was putting in laminate flooring throughout most of the house - the carpet was in poor shape, and it is really a waste of money to put new carpet in

did some repairs on the roof, because of minor leaks

repainted the whole inside

put in new toilets - old ones were leaking

and some various other odds and ends

it looks less likely that i will be renting it out