Thank you for the informative response! I do have follow up questions;
In your reply to first question you state "Yes, any capital improvements (with more than a one year life) can be added to the inherited value. Other expenses will be selling expenses. "
To clarify what is considered a capital improvement, is there a dollar value also associated with the definition? For example, I paid plumber $200 to install shower/tub fixture which included part & labor. This fixture is expected to last more than a year so even though relatively low value is this still considered capital improvement or is this selling expense. I also replaced several A/C vents that fall into this same category. I also incurred expenses for mitigation of cigarette smoke smell (purchased products from janitorial store) which I assume could be considered selling expenses, is this correct? Is it correct to classify non capital improvement items as selling expenses if the purpose was to get the townhome in condition to put on market for sale? I understand the typical maintenance/monthly expenses cannot be deducted such as the HOA fees, monthly utilities, & insurance.
Also, to clarify answer to my question #4 regarding how to treat the inherited townhome for 2022 on my tax return - I never advertised for sale or for rent in 2022 as it was in no condition to rent or sell. I started looking into what would need to be done to get ready to rent but was not able to complete in 2022. I completed repairs in 2023 and then made decision to sell vs rent. So since this was vacant the rest of 2022, do I need to treat as 2nd property or is there validity to treating as rental even though it was never rented for the remaining 4 months of 2022?
Thank You
