Repair expenses for a rental converted to personal use

[ahalverstadt]

I purchased a house with a tenant in it, whose lease I had to assume. I rented the unit to the tenant for six weeks. The tenant moved out and left the unit in poor condition. I spent the next six weeks repairing it (deep cleaning, patching, sanding, painting, refinishing the floors). Then I moved in, and it became my primary residence.

What, if any, repair expenses can I deduct? All of the expenses were incurred after the tenant moved out and while I was preparing the unit to become my personal residence. Yet, most of the expenses were only necessary because of damage done by the tenant. It was not in rentable condition when they moved out.

Also, how do I account for the days in between the tenant leaving and me moving in (six weeks when the house was vacant and being repaired)? Are those days considered personal use?

[tagteam]

If you took the house out of service as a rental (with a view toward converting to personal use) then, technically, you cannot deduct the cost of repairs, maintenance, et al.

[ahalverstadt]

That seems so unreasonable to me. If you're just returning the unit to the state it was in before the tenant damaged it, shouldn't that be a rental expense?

[AmeliesUncle]

I don't think this would change Tagteam's correct answer, but of curiosity, did the damage happen AFTER you bought the home?

If the damage happened before you bought the home, it seems unreasonable to purchase a house and expect to deduct costs to improve it to be better than when you bought it.   Most likely you would have paid a discounted rate for the home if it was already damaged.

[ahalverstadt]

@AmeliesUncle Thanks for the help. Some of the damage happened before I bought the property, and some happened after, as a result of the tenant's shoddy repairs on their way out. I understand your point. And yet, if I had continued to rent it out, I *would* be able to deduct the costs to improve it to a better condition than it was in when I bought it. As an aside, because the property came with a tenant (and was never inspected empty), I think the purchase price reflected an assumption that it was in rentable condition. But when the tenant moved out, we found that it wasn't. I could never have re-rented it in the state that it was in. All the repairs were made to simply make it habitable again.

I'm not planning to deduct the costs. But personally, I still think it's unreasonable. There's a difference between repairs made to return a rental to the baseline condition it was in when a tenant moved in (which I think should be rental expenses) vs. repairs made to improve a rental for personal use (which should be personal expenses).