@Anonymous wrote:
I disagree. I would take them as a repair. The fact that you didn't actually pay the item should not affect the deductibility. this should be treated no differently than a credit to the buyer for unpaid real estate taxes. the same would be true for credits for unpaid utilities, HOA fees, or other expenses related to the rental.
Following Opus 17. those would not be deductible as an expense because they were not paid but would be treated as a selling expense.
I don't understand your answer. You seem to be saying both yes and no.
I don't believe these are deductible repair expenses on schedule E. I believe that instead, they are an adjustment to the selling price on schedule D. (As a result, the potential savings is slightly less, but that's the way of things.)
How can you deduct a repair expense you did not actually pay? If the repairs were made during the rental period they would be a deductible expense. Or if the landlord gave the tenants a discount on their last month's rent, that would also show up on schedule E (as reduced income rather than a deduction). But here, the landlord/seller has no way to verify that the repairs were actually made or that they cost the amount agreed upon, and the repairs were definitely not made while the landlord/seller owned the property, but after the property changed hands. Therefore they can't be deducted as landlord repair expenses. However, a seller's concession, for any reason, can be applied as an adjustment to the selling price.
