Colorado Springs, CO. · Member since 2017 · 43 posts · 7 votes
Hi BPers!!
I've recently been on the Forums asking about using the BRRRR Strategy, and have had some great insightful discussions.
My next question is Rehab costs and business expense.
If I use the BRRRR way, and I use my money for the Rehab costs, then is that cost considered a business expense, and would I recoup a percentage of that cost in the coming tax season?
Investor · Pawleys Island, SC · Member since 2008 · 1k+ posts · 837 votes
8y
As a general rule, rehab costs are considered a capital improvement and the cost of the improvement is added to the tax basis for the property. At tax time, a portion of the cost of the proprety can be claimed as a rental expense called depreciation. After 27.5 years of depreciation, you will have recovered the full cost of the dwelling structure, including the rehab cost.