rental

[bnichols56lee]

I'm currently legally separated from my wife and living apart since September of 2023. Over the past 12 years we have been renting our 2nd home. in January of 2023 the renters moved out. That January' rent was actually from their initial move in payment, first/last/damage deposit in March of 2017. in February of 2023 we went in and spent $1000's to clean up the home. We intended to leave the home empty so my wife could move into the home once the divorce process began.  So, since there was no income, yet i  did have Maintenace / repair fees can i still deduct these fees on my 2023 return?

[DaveF1006]

Yes, you may report the maintenance and repair fees as expenses. You will need to indicate in your return that you converted the house from a rental to personal use when you arrive at that screen. This is the first screenshot.

Next screen after that will ask you if you rented this all year. Here you will say no. Then it will ask how many days was it rented and how many days were for personal use. In this case, if the renters moved out Jan 15, this would be 15 days rented at Fair Market rent and 350 personal days.  This is the second screenshot included below.

When you enter your expenses, you would enter the full amount of the expenses. The program will automatically adjust your actual expenses you can claim for the period of time between Jan 1 and when the renters moved out.

 

[bnichols56lee]

I saw that screen , but if you see the “note” it says living in the home after the days of converting into personal use these days don’t count as personal use ..??? 

[MarilynG1]

Once you have converted your Rental to Personal Use, it is no longer a rental as of that date, so  you can no longer deduct repair/maintenance costs.  If you were not marketing the home as a rental or attempting to rent it out, then it is no longer a rental property.  You can still deduct Property Tax and Mortgage Interest on Schedule A as Itemized Deductions. 

Any major improvements you do are added to the Cost Basis of the home, so keep track of those.  Also save the amount of Accumulated Depreciation, as you will need that whenever the home is sold.

If you sell the home later, you now have an increased Cost Basis, to lessen your taxable Capital Gain.  If you sell in 2024, the repairs/maintenance could be added as 'Sales Expenses' to the transaction.

Here's more info on Rental Conversion to Personal Use.

@bnichols56lee