Repairs and improvements for real estate professional vs. non real estate professional

[buly]

Hello.  I am a real estate professional actively engaged in business.  I inherited a condo in 2022 and throughout 2023 I personally made both improvements and repairs to the property.  I also had less income than expenses in 2023 - i.e., the repairs and improvements exceeded my income by 25K.

So far I've heard from turbo tax and elsewhere conflicting information on how I can deduct these repairs and improvements.  Some people say I can deduct them both and they will both be carried forward. Some people, say no I cannot deduct expenses/repairs that exceed my income.  I believe the fact that I am a real estate broker allows me to carry these loses/capital improvements forward regardless of my income in the year of renovation.

Help?  Advice?  I need clarity.

Thank you.

[Vanessa A]

No. The fact that you are a real estate professional does not allow you to use the same treatment on your personal property.  Since this is personal property, you cannot carry these losses or improvements. 

[buly]

Perhaps I should have added:

• The property is not my primary residence.
• I've never lived there.
• The only time spent there was to repair and improve so I can lease it out.

It's my understanding that if the property is going to be leased out, is not a primary residence, that I've never benefited from its use as a home then ther I could carry forward the losses and capital improvements.

Does that change the outcome?

Thank you.

[Vanessa A]

Yes, if it is purely an investment property and you are in the real estate investment business, then it would be treated like any other property you sold, even if you obtained it through an inheritance.  

If you are a realtor, and this is not your normal line of real estate work, then it would not make a difference.  So, basically it depends on how much the inherited property lines up with your regular line of real estate work. 

[buly]

Thank you.  I did sell another investment property two years prior.