Paying for Rental Repair over Two Years

[zachschuster]

In 2016 the A/C in our rental property died in the peak of summer. We replaced it but had to finance it. We just finished paying it off in Feb. 2017. What can be claimed as the repair cost for 2016? The total cost of the repair, or just what we paid off in 2016?

[MargaretL · Accepted solution]

The entire amount that you financed is taken into account for 2016 tax purposes.

Note: If the AC cost is more than $2500, the AC is treated as permanent improvement to the building and should be entered as an asset (and be depreciated) and not as an expense. When going through rental income and expenses, the program asks about items purchased that cost $2500, be sure to answer them accordingly to your situation.