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Arthur Rubin
Arthur Rubin, Tax Preparer
Category: Tax
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Experience:  22 years of tax preparation experience, including individual, trust, and estate returns.
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When I lived in my co-op, only a percentage of my maintenance

Resolved Question:

When I lived in my co-op, only a percentage of my maintenance expense was deductible on Schedule E. Now that I am renting out my Co-op to a tenant, can I deduct 100% of my maintenance on Schedule E.
Submitted: 5 years ago.
Category: Tax
Expert:  Arthur Rubin replied 5 years ago.
Dear "Customer",

Thank you for using Just Answer.

Could you explain how any of your maintenance expense was deductible on Schedule E while you were living in the co-op? Did you own the building?
Customer: replied 5 years ago.
Based on the number of shares allocated to my apartment, I received a 1098 form that allows me to deduct the real estate tax and the mortgage interest incurred by the apartment building. This came to approximately 50% of my yearly maintenance. These deductions are allowed on schedule E whether you are living in the co-op or not. What I need to know is whether the other 50% of the yearly maintenance can be deducted on schedule E now that I have a tenant and the co-op is considered rental real estate.
Expert:  Arthur Rubin replied 5 years ago.
Ah, that makes sense. I had forgotten that the real estate tax and mortgage interest with respect to the common areas were included in the co-op maintenance fee. However, they I thought they could only be taken on Schedule A (itemized deductions), rather than Schedule E.

The answer is, in general, yes. It's possible that there could be some capital expenses in the maintenance fee, but any maintenance fees can be deducted for a rental property. As an example of a capital expense, upgrading the roof (as opposed to a simple roof repair) would be a capital expense in the hands of the association, so is passed through to you as a capital expense toward your share of the common areas.

Unless you started renting it on January 1, you'll need to "pro-rate" the annual fee between the part allocated to the time you were living in the unit and the time it was used as a rental, and move the appropriate amounts to the respective forms. In general, I would put unspecified association fees on Schedule E line 11 (Management fees), but other lines could probably be justified.

I'd need to see the line-item allocation to be sure
Arthur Rubin, Tax Preparer
Category: Tax
Satisfied Customers: 1260
Experience: 22 years of tax preparation experience, including individual, trust, and estate returns.
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