We fixed/upgraded our rental property last year and we paid out of our pocket. Part is reimbursed by a related 3rd party this year. We wonder what to do in tax filing:
1) File net cost in last year return.
2) File net cost in this year return.
3) File what we paid as expense for last year and file what we received from the 3rd party this year as income for this year.
2nd Question:
As we also upgraded our place together with fixing, can we include this as the cost basis for the property? Our property value has appreciated some from our purchase price. We wonder if this cost could be added to the purchase price as the cost basis.
