The key words here are what were Improvements and what was Maintenance and Repair.
Improvements are usually Capitalized and amortized to create a Depreciation Deduction for the declared lifetime of the improvement. This means that all of the improvements that you have done to the home from the time you purchased it to the time that you moved out must be included in the Cost Basis of the Home at the time it became a Rental Property. For Example:
- Your Home cost your $70,000
- The cost of the A/C installation and other improvements such as Landscaping, New Roof, Wood Floors, etc. Total up to $30,000.
- This will make the Cost Basis of the now Rental Home $100,000.00.
Regular Repairs and Maintenance that you performed on the home, while you were living in it, do not go into the Cost Basis.
Repairs and Maintenance
The Repairs and Maintenance that you can use for Schedule E of your Tax Return are only those that were done since the property was placed on the rental market.