Expenses vs. cost basis in renovation

[Kevin Polite]

I read somewhere that when you are remodeling a house to rent that some of the repairs actually can be written off in the year in which the remodel takes places and that it all doesn't have to be included in the cost basis. I'm near completion of a remodel and if this is true would really help me at tax time and if this is true what determines what can be written off as repairs and what must be added to the cost basis?

[Dave Toelkes]

Sorry to be the bearer of bad news. If you are referring to the US Tax Code, whomever you "read somewhere" is misinformed. A renovation project is generally deemed by the IRS to be a capital improvement and can not be expensed. Instead, it is an adjustment to cost basis and recovered through depreciation only after the property is put in service as a rental.

The IRS goes a step further and tells us that repairs needed to make the property ready to rent are also adjustments to basis and not expenses.