Are renovations in property deductible in addition to deprec?

6 Replies

Carl Fischer can you deduct these expenses for repairs from the rental income over a period of 2-3 years to avoid taxes on income.

Like if the property needs repairs like 15000 when you purchase it?

Thank you

@Mansi Mehta Whether or not you must capitalize rehab expenses depends upon when you place your rental property in service.  Any expenses you incur before your place the property in service as a rental must be capitalized and depreciated over its useful life.  That's 27.5 years for most rehab expenses.  Appliances and other similar equipment have shorter useful lives and may be expensed under Sec 179 for the year they are placed in service.  If your property is available for rent (ie. "in service"), then you must capitalize any rehab expenses greater than $2,500 (per invoice). Some expenses, like painting, can be expensed as maintenance, as long as this expense is invoiced separately.  You should discuss this with your CPA to make sure you are maximizing your deductions under the IRS rules.

Originally posted by @Mansi Mehta :

Can you make the repairs like painting, fixing hvac tax deductible in addition to depreciation?

Any good articles on the same?

Thank you

Already mentioned above, expenses are either deductible or depreciated depending on how it must be treated. Your tax advisor should help you categorize them into the right bucket. 


There is a whole tax code that determines when something can be expensed vs. when it's required to be capitalized. 

Unless you do a cost segregation nothing on a rental can be on a shorter time frame with a very few exceptions. 

Nothing is depreciable over 2-3 years- there are set standards by the IRS. 

I'd recommend talking to a tax professional and letting them handle this for you to ensure you're not only following the law, but LEGALLY maximizing your deductions.