Can I tax deduct my current property repairs

Question

My question is I have a property that I am repairing and renovating to become a future rental within the next year or so. I think that I should be able to write off the expense of renovating, as it will become a rental? Can anybody clarify what I might need to do or if that's possible? I would think it wouldn't be any different than a house hack, as that's what I plan to do in the future is house hacking.

Linda Weygant · Answer

You're exactly correct.  Major improvements to a primary residence can be Depreciated after the property is put into service as a rental, assuming the timing of said improvement is fairly quick after the in-service date. Otherwise you've got to declare only the Fair Market Value of the improvement (if any at all).  You then can use only the lower of cost or market as the depreciable basis.

Michael Coates · Answer

@Jimmy Lieu I have a CPA and what I learned from talking to him about a similar situation.  You might be able to write off and expense a percentage of the repair equal to the percentage of the square feet of your house being rented out.  Hopefully that makes some sense to you ! I recommend getting CPA wish I did from the beginning,  Paid him to redo my 2017,and 2018 taxes because turbotax was not my best decision

JD Martin · Answer

@Natalie Kolodij @Linda Weygant . I'm almost certain  you can't legally deduct repairs based on future "what-ifs". What if you decide to stay there later because it's so nice? Now, you can do whatever you want up to the point that the IRS audits you.

Ashish Acharya · Answer

no you can’t even if it is will be rental in future or you are living in it right now.

You will be able to depreciate. But need more info.

Sarah Brown · Answer

If I'm understanding correctly, it's primary resident now, but will be a rental within this year?  It is a grey area.  I would chat with your CPA about it.

Steve Morris · Answer

If someone is house hacking their primary residence (owner occupying), would renovations still qualify as tax writeoffs and depreciation?

Again, get a CPA and understand the 2 out of 5 rules to qualify as investment or primary residence.  Also understand how much time you can use it every year at all.

My gut is you fix it up and then use it as a principal residence before turning it into a rental may be an issue.

Jimmy Lieu · Answer

If someone is house hacking their primary residence (owner occupying), would renovations still qualify as tax writeoffs and depreciation?

Trevor Schuler · Answer

@Ashish Acharya thank you for the quick response guys! It is our primary but will become a rental. We've lived in the home for 9 years and we've decided to finish this one and make it a rental and then maybe house hack a multifamily property every few years.

Steve Morris · Answer

"I think that I should be able to write off the expense of renovating, as it will become a rental?"

Get a CPA.  I'd guess it depends on two things:

1) Is it your principal residence and not investment property?

2) Are the repairs expensable or depreciable - Again, a CPA question.

Can I tax deduct my current property repairs

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