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Taxes I rented my house for 3 months last year, Oct-Dec. I…

Taxes I rented my house for...
Taxes
I rented my house for 3 months last year, Oct-Dec. I collected $4500 in rents. But I spent approx $20K in repairs. I was told I can depreciate that cost so that I won't lose the deduction. However, the depreciation only gives me about $200 per year for the next 27.5 years. I depreciated as leasehold improvements. I plan to sell the house next year, or the next but the intention is to sell the house asap. Is there anyway I can get a larger deduction for that large expense I made last year?
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Answered in 25 minutes by:
3/21/2018
Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 33,389
Experience: Taxes, Immigration, Labor Relations
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Based on the amount - that most likely should be classified as Improvements - and not as repair.

Improvements are capitalized.

You will need to add improvement cpost to your basis.

You start depreciating when teh property is placed in service.

You are correct - that residential rental is depreciated over 27.5 years.

If the property is placed in service in October - the first year depreciation will be 0.758% of the basis.

Specifically for $20K improvements - that will be $151

but for the second year - it will be 3.636% or $727

We may not deduct larger depreciation.

But if you will sell the property sooner rather than later - that will make no difference as all unrecoverable cost will be included into teh basis - and will reduce your taxable gain.

Sorry if you expected differently.

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Lev
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