Do I have to advertise to deduct repairs between tenants?

Question

Hello all!

I own a SFR that the current tenants are moving out of. I plan to do some repairs and rent it out again. Do I need to advertise the house for rent before I do the repairs in order for those repairs to be tax-deductible?

I think I know that when you first buy the house, anything you fix before you advertise it for rent goes into the basis and gets depreciated. But I'm not sure what happens between tenants, when I've already owned the house for a few years. Is the fact that it was recently rented out enough, or do I need the ad to prove that it's still a rental?

(The main thing that's driving this is that I have to fix something expensive, so I want to deduct it, if that's possible.)

Thanks!

Matt R.

Ashish Acharya · Answer

No you don’t have to.

The concept of advertising comes in to play when you are first rehabbing a property. If you advertise after your properties is at least livable are rentable, then all the work you do after the advertisement can be deducted rather than capitalizing to the basis of the property. This is not relevant for you.

Eamonn McElroy · Answer

Don't have to, like Ashish said. We look at change in use, and a change in use has not occurred.

The bigger question is why wouldn't you? The average SFR rental turnover is less than one month unless the tenants trash the place. Don't you want a tenant signed and ready for move in as soon as things are wrapped up?

Michael Plaks · Answer

Then you are focusing your energy on the wrong things. Lining up reliable contractors is way more important than worrying about tax deductions.

But as far as deducting your repairs - no, you don't have to advertise, as already stated by my colleagues.

Matt R. · Answer

@Bill Brandt @Ashish Acharya @Eamonn McElroy Thanks for the advice!

One of the reasons I'm not advertising it right away is that I'm already having uncertainty around contractor schedules. I don't want to advertise something I may not be able to deliver on time. Once one big thing and a couple of the smaller things I have to fix are at least in progress, I will have more confidence in the end date.

Matt R.

Bill B. · Answer

If it’s a rental, it’s empty and your fix it, and it’s a rental with no personal use I don’t see how there can be any problems. What if it wasn’t rentable or not rentable for the price you want without the repairs, then obviously they are deductible.

Ps. Your tax return will be for the year, not date by date. So an audit would have to come up first.

Do I have to advertise to deduct repairs between tenants?

Do I have to advertise to deduct repairs between tenants?

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