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reluctantlandlord
New Member

I own a rental property that had a special assessment for a building rehab. If I took out a loan for a downpayment on the assessment due, can I claim this as an expense?

I should note, this assessment is not for updating appliances or normal wear and tear. It's a complete reconstruction of the building exterior due to faulty work done by the original contractor (poor weatherproofing).

1 Reply
Opus 17
Level 15

I own a rental property that had a special assessment for a building rehab. If I took out a loan for a downpayment on the assessment due, can I claim this as an expense?

 The cost of the assessment is not a deduction. It is an improvement that adds to your cost basis and is depreciated over 27.5 years,  The same as if you made similar improvements to a freestanding house. 

The interest on the loan is a deductible expense, but the principal payments are not.

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