JohnB5677
Expert Alumni

Deductions & credits

You didn't quite use the correct term.  The improvements to the house that you made before it was a rental can be added to the cost basis to reduce the capital gain on the house.  This is not a deduction in the traditional sense.

 

However, this should have been done back when you turned it into the rental and it would have been depreciated annually.

 

Depreciation.

Depreciation is a capital expense. It is the mechanism for recovering your cost in an income-producing property and must be taken over the expected life of the property.  You can begin to depreciate rental property when it is ready and available for rent. See Placed in Service under When Does Depreciation Begin and End? in chapter 2.

See IRS Publication 527 (2020), Residential Rental Property

 

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"