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tmay
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expense improving one of multiple rentals

I own 6 rental units in retirement and one unit has been tied up in a deep remodel reaching completion this year2024. That single family unit was built by me in younger days,then sold, and repurchased for 100%rental. As an elder DIY type, I have been very slow in completing improvements: a wing addition during COVID achieved final inspection in 2022; then a basement remodel with added entrance and radon abatement carried through 2023; 2024 has been consumed with revisions to solar operation and insulation panels and cosmetic woodwork and floors. All the while this remodel has been retarded by 3 turnovers and maintenance among the other rental units. I have been advised to just take basic expenses during the unoccupied work, example: ongoing annual depreciation $4812,Utility $933 and propTax $3015.
Now late in 2024 I will add a new depreciation schedule for the total addition,revision/improvements, when I formally advertise as ready for occupancy. After 8 years of rental and this period of DIY improvement I intend to rent it for at least 10 more years and this unit probably will probably be the last to be sold, because it is conveniently 2 doors from my home.
With each year of TUrbotaxDesktop the loss on this one unit has just been merged into the net income of the other units. On StepbyStep I simply report the unit as 100% rented because that is the purpose it had prior to remodel and will have on return to service.On stepbystep I check off no Passive Loss carryover as each year of $9000+ loss has been merged with my multiple schedule E's.
In my nonprofessional path as a rentee/landlord is this the right   and simple model or is there some other treatment of major renovation that is 100% for rental?

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1 Reply

expense improving one of multiple rentals

from IRS PUB 527

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.

 

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

Note that the value of your work and labor cannot be added to tax basis.  

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