I have rented out a condo unit for a number of years. Each year I have declared passive income received from the rents against applicable rental expenses – including depreciation of about $9,000 each year. My tenant moved out of the unit at the end of January 2024, and at that point I was unsure if I would try to re rent the unit or sell the unit. Regardless of which of those decisions I made, I went ahead and completed minor repairs at the unit while the unit was vacant. These repairs included fixing minor water leaks, patching and touchup painting minor scuffs and abrasions on walls, and replacing a few broken boards and rails on the outside deck. Though no one occupied or lived in the unit after the renter moved out at the end of January 2024 I continued to pay for HOA fees, insurance, and utility costs at the unit.
In May 2024 I decided to try and sell the unit if an acceptable selling price could be negotiated, so I listed the unit for sale with a local real estate agent. If an acceptable sales price could not be agreed, I planned to just re rent the unit. After the usual negotiation with several potential buyers, I finally sold the unit in early August 2024. Part of the negotiation with the buyer included my agreement to pay for some exterior unit repairs owners needed to make before a HOA exterior painting project could be completed sometime later in 2024.
My question is how do I account for the expenses incurred at the vacant unit after the renter moved out at the end of January 2024? Are these considered expenses against passive rental income, or selling expenses, or for tax accounting purposes should some of these expenses be considered increases in the basis of the unit sold? A summary of expenses incurred at the vacant unit between February 2024 and the August closing date were:
HOA fees of $400/month
Utility fees paid of about $200/month
Minor repair costs made by the owner after January 2024 – these are costs I paid for materials purchased at the local home improvement centers (about $1,500)
Costs paid to contractors after January 2024 to fix minor water leaks and to re stretched carpeting in two rooms of the unit ($760)
Exterior repairs to the unit made after May 2024 to comply with conditions the buyer insisted be met as a condition of the sale (about $3,100)
Home and termite inspection fees of $710
Appliance insurance costs of 73/month
I also need to know how/where each of these expenses should be entered into the 2024 TurboTax program.
One final issue I face is how to handle depreciation expenses on the unit. Clearly depreciation in January 2024 will be applied against rental income received in January 2024, but how about depreciation for February through August 2024?
