will 2020 repairs carry forward to 2021 rental year?

[rbyu]

I had a10 month vacant house during COVID.  It took forever to do repairs to rent for 2021. The repairs done in 2020 was to prep for rent in 2021. Prior to 2019 + 2 mo in 2020, I rented but it got really messed up by prior tenants.  for  2020 was only rented for  Jan and FEB.  I tried to rent earlier but could not.

I can't remember, but will the repairs made in 2020 roll over or carry forward to cover 2021 rental income? Or should I claim the repairs in 2021 to make sure?  I can't remember.  Thanks for any help.

[Bsch4477]

Deduct the expenses for repairs in the same tax year that you incurred them. 

[rbyu]

You did not answer my question, will it carry forward to offset rental income for 2021?  Do you  understand what I am asking?  Thanks!

[DoninGA]

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@rbyu wrote:

You did not answer my question, will it carry forward to offset rental income for 2021?  Do you  understand what I am asking?  Thanks!

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Repair expenses incurred in one tax year do Not carry over to the next tax year.  If the expenses incurred are greater than your rental income, you will have a net loss for the rental to report on the tax return for the tax year.

[rbyu]

oh, Ok, so the net loss will offset next year's rental income.  Thanks. 

One last question, .... Depreciation i.e. Improvements are better to have or expensing all for the year.  I am in the position where I can do either due to condition.  I  cannot decide to depreciate some items than expense all this one year.  I know it depends on future plans, but I am asking as a norm.  I hope this is not too lame to ask.

Thanks.

[DoninGA · Accepted solution]

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@rbyu wrote:

oh, Ok, so the net loss will offset next year's rental income.  Thanks. 

One last question, .... Depreciation i.e. Improvements are better to have or expensing all for the year.  I am in the position where I can do either due to condition.  I  cannot decide to depreciate some items than expense all this one year.  I know it depends on future plans, but I am asking as a norm.  I hope this is not too lame to ask.

Thanks.

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Uh, no.  The current year rental expenses will offset the current year income for a net loss in the current tax year.

If you can expense the asset cost in the current tax year then do so and do not depreciate the asset.  If you depreciate you will have to recover all of your depreciation as a capital gain in the year the rental is sold.

[Critter-3]

If the rental unit was off the market for a long time then the "repairs" are not really repairs you can expense ... they are improvements that must be depreciated.  

What is the difference between repairs and improvements?

Here's a rule of thumb: An improvement is work that prolongs the life of the property, enhances its value or adapts it to a different use. On the other hand, a repair merely keeps property in efficient operating condition.

https://www.lewis-knopf.com/uncategorized/repair-or-improvement-know-the-tax-rulescritical-differenc...

[rbyu]

thanks!