TomD8
Level 15

Investors & landlords

IRS Publication 527 is the definitive guide to the tax aspects of having a rental property.

https://www.irs.gov/pub/irs-pdf/p527.pdf

 

Repairs and any other expenses that you incur before the property becomes available to rent are not deductible.

 

However, improvements you make to the property are capitalized.  Capitalization means that you recover your costs by depreciation over time.  You will find a list of common "improvements" on page 5 of IRS Publication 527. This website gives a more detailed explanation of these concepts:

:Repairs vs. Capital Improvements to Rentals: Definitions & Taxes (sparkrental.com)

 

The TurboTax online "interview" will ask you specifically about your improvements (if any) to the property.

 

When you eventually sell the property, the cost of the improvements is added to your cost basis, thus reducing your taxable capital gain.

 

 

 

**Answers are correct to the best of my ability but do not constitute tax or legal advice.