Deductions & credits

Unfortunately, repairs are not a deductible rental expense unless they are made after the property is placed in service (listed and available for rental or being rented).  Otherwise, repairs are the normal responsibility of any property owner to keep their property in good order.  If you had decided to bail out and sold the property as-is, you might have had less profit (and paid less capital gains) or you might have had a loss (which was not deductible on personal property).  There's not much you can do with losses on personal property.

 

Improvements can be added to your cost basis and are recovered by depreciation when you place the property in service.

 

Casualty losses (theft, vandalism) are not deductible on personal property unless due to a federally declared disaster, and are likewise not deductible as a rental expense unless they happened after the property was placed in service.

 

Improvements add to the value of the property, extend its life, or adapt it to a new use.  For example, remodeling the kitchen is an improvement, but painting the kitchen or replacing a broken electrical outlet is a repair.  (When doing an improvement like remodeling the kitchen, the entire cost is considered an improvement even if it includes some minor things like painting.)  However, even if you remodeled the kitchen and count painting as part of the improvement cost, also painting the bedrooms at the same time would be a repair as to those rooms.  Something major like rewiring the house would probably be an improvement since it extends the useful life of the property, even if the reason for rewriring the house was that vandals stole the copper.  

 

You would have to look at the totality of the work and decide how much, if any, could count as an improvement.  Keep copies of documents proving this for as long as you continue to own the home, and for 3 years after selling, in case of audit.