Rental Property

[DJO87]

What deductions (expenses) can I use after turning my long-term rental that is in North Carolina into a short-term rental?  My permanent residence is in California.  What is considered an upgrade vs replacement/repair?  I had to replace or replace or repair many aspects of the residence in order to get it in rentable condition.  I also lost a few months of rent in the process.

[KochuK]

HI DJO87, thanks for attending the event and post questions.

Long term rental and short term rental are all reported on Schedule E Supplemental Income and Loss.

To differentiate Repairs vs. Improvement, please refer to IRS Pub 527, page 5. Repairs are expenses to maintain items in their normal working conditions while improvement results in betterment to the property. Table 1-1 provides examples of improvements.

https://www.irs.gov/pub/irs-pdf/p527.pdf 

I also attach links to Schedule E and instructions for you to view type of expenses, Detailed explanation is on page E-6 on the instruction link.

https://www.irs.gov/pub/irs-pdf/f1040se.pdf 

https://www.irs.gov/pub/irs-dft/i1040se--dft.pdf 

There is no deduction/claim of lost revenue. In 2022, you have less revenue and more expenses or capital expenditure due to the conversion.

Hope the above helps. Thank you.