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Writing off renovation expenses
Hello. I am almost done completing a half a million dollar gut renovation on a 2 family. I will be living in one unit and renting out the other unit. Am I able to write off the renovation expenses for my taxes? One CPA I’ve been working with said I can only write off the depreciation. I’ve talked to multiple other people who say I should be able to write off all of the renovation expenses. Do I need to find a different CPA that specializes in real estate? I’m in MA. Thanks!
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- Tax Strategist| National Tax Educator| Accepting New Clients
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The answer is get someone who specializes in REI.
1- none of the half you're living in will be able to be written off or capitalized/depreciated. If/when you move out it gets incldued at that point.
2- Most of the renovations needed to put a rental in service need to be capitalized as a standard rule. There are some parts to renovations though that CAN be placed on shorter lives and expensed all at once....carpet, appliances, kitchen cabinets.
It's very situation specific and this is why a REI specialized tax pro will help. Someone who's just general is likely to just cpaitalize it all- and any one who says you can expense a whole $500k renovation is likely to end up getting you audited becuase that's bs.
