rental home

I purchased my grandparents home and 18 acres 22 years ago, granting them a life estate. That ended in 2004. The house was resurveyed and split off with 1 acre in the same year and has been vacant until 2020 when it was rented. I put all sorts of money into fix up, repairs, basement waterproofing, new furnace etc. over the years before it was rented. Added A/C once it was rented. Can any of the money spent prior to it becoming a rental be used as an expense for 2020?

posted

Yes. When the house becomes a rental, you use the lower of fair market value or your basis in the property. Your basis in the property would be what you paid plus all of the expenses improving it. Compare that to the value when you began renting.

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