Deducting cost of repairs / improvements after renting property but before selling it

[small_taxpayer]

We have been renting out an apartment for several years. This year we had a vacancy and did a bunch of work to get it ready for a new tenant (extra cleaning, repair blinds, replace waste disposal, install new window air conditioner where there wasn't one previously). We then decided to sell the property instead of renting it out again. So my question is, are any of these deductible?

We paid these expenses at a point when we expected to continue renting this property, and we did then list the property for rent again. But we did not subsequently get a paying tenant. On the other hand, these will probably all be more than 90 days before the sale closes, so I don't think they can be counted as expenses of the sale. But maybe the air conditioner can at least be treated as a capital improvement, since it is a large unit that required changes to the window frame and can't easily be removed?

Thanks for any advice you can give.

[PattiF]

These expenses are deductible since it was still considered a rental. You expected to rent the property and did list it for rent. Keep a record of the rental listing if needed. The air condition could be listed as an improvement.

Here is some information from the IRS that applies to your situation.

From the IRS Publication 527:

Idle Property

Continue to claim a deduction for depreciation on property used in your rental activity even if it is temporarily idle (not in use). For example, if you must make repairs after a tenant moves out, you still depreciate the rental property during the time it isn’t available for rent.

Vacant rental property.

If you hold property for rental purposes, you may be able to deduct your ordinary and necessary expenses (including depreciation) for managing, conserving, or maintaining the property while the property is vacant. However, you can’t deduct any loss of rental income for the period the property is vacant.

[Carl]

Provided the property was advertised and/or your intent to rent it again was up until at least the date you signed the sales contract to commit to the closing, you're fine claiming valid expenses on the SCH E.

Now for property improvements, you enter those in the assets/depreciation section, as those are added to your cost basis. Make the in service date for property improvements done after the last tenant moved out, the closing date of your sale. That way no depreciation will be taken, or if any is taken it will be to minuscule to matter or make any difference.