In this case, can I deduct expenses of renovations and maintenance/repairs on the rental property?

MccTax 2022 — Mon, 09 Mar 2026 05:14:43 GMT

After 2 years of renting our property, due to some damages of a tenant, in the last 3 months of 2021, we made some renovations and maintenance/repairs work (works done personally and by contractors) while we were living there. We will rent our house again in March or April in 2022 when the work is finished.

I rented out my house which I originally purchased as my primary residence. But, in 2021, for 5 months, I lived in a different state and changed temporarily my primary address to that state.

In this situation, can I deduct the expenses of renovation and maintenance as an expense of the rental property in the 2021 tax file?

Re: In this case, can I deduct expenses of renovations and maintenance/repairs on the rental prop...

Cynthiad66 — Tue, 22 Feb 2022 21:16:53 GMT

@MccTax 2022 - No - Because the property is considered personal property if you are living there. You can add to the basis of the property for the capital improvements. So when you start renting it you can add the cost of the renovation to the cost of the property to determine the basis for depreciation.

A capital improvement is an addition or change that increases a property's value, increases its useful life, or adapts it (or a component of the property) to new uses. These items fall under categories sometimes called betterments, restorations, and adaptations.

Examples that constitute capital improvements include:

additions, such as a deck, pool, additional room, etc.
renovating an entire room (for example, kitchen)
installing central air conditioning, a new plumbing system, etc.
replacing 30% or more of a building component (for example, roof, windows, floors, electrical system, HVAC, etc.)

Also

Capital improvements that add to the value of your rental property, prolong its life, or adapt it to new uses must be depreciated over a period of time rather than deducted as a current-year expense. This would include things like:

Remodels and room additions (including decks and porches)
New or upgraded landscaping, irrigation, sprinkler system
Hardscape such as pavement, block or retaining wall, patio
Fencing
Swimming pool, spa
Storm windows, doors
New roof
Central vacuum or security system
Upgraded wiring, plumbing, duct work
Central heating, AC, humidifier
New furnace, water heater
Filtration, soft-water, or septic system
Built-in appliances
New flooring or wall-to-wall carpeting
Upgraded insulation
Satellite dish

In other words, if you spent $8,000 on a new roof last year, the IRS won't let you deduct the entire $8,000 from last year's rental income. Instead, the $8,000 must be depreciated, which means you deduct it over a period of time instead of all at once.

You are living in the house so you do not have a rental deduction for the period while you lived there. However, if you rented the house for part of the year you can deduct those pro-rated expenses. See below for information on how to enter those expenses.

To enter your rental improvements, simply follow the directions to enter your rental income and expenses. At some point you'll come across the Rental Summary screen. Select Start next to Asset/Depreciation and follow the onscreen instructions. We'll figure out which depreciation method works best in your favor.

Note: Although it doesn't seem logical, refinance fees and mortgage points are also entered in the Assets/Depreciation section. The IRS considers these amortizable intangibles and accounting rules dictate that those are to be depreciated instead of deducted as an expense.

Re: In this case, can I deduct expenses of renovations and maintenance/repairs on the rental prop...

MccTax 2022 — Tue, 22 Feb 2022 21:32:07 GMT

Thank you very much.

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In this case, can I deduct expenses of renovations and maintenance/repairs on the rental property?

Re: In this case, can I deduct expenses of renovations and maintenance/repairs on the rental prop...

Re: In this case, can I deduct expenses of renovations and maintenance/repairs on the rental prop...