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Updated over 5 years ago,
Finally selling first rental - Tax questions
My condo in Laguna Niguel CA is worth about $560,000. I purchased it for $365,000. I lived in it during 2010 (while I was fixing it up) and then rented it starting in 2011. After 8 years my tenant has given notice and will move out of the condo on May 31st when the lease ends. I plan on selling the condo. As soon as the family is out, I will have new mirrored wardrobe doors, new baseboard, new paint and probably new carpet and a few other upgrades. Once completed the realtor will have pictures taken and we will get the house on the market. Including repairs, I’m hoping the condo will sell in about 75 days after tenant moves out.
Question 1. Can I add the above “repairs” to the price I paid for the condo to figure my tax basis? Or are these simply normal expenses that I can not use? They will definitely "improve" the property.
Question 2. Assuming this condo is vacant for 75 (or more) days, can I continue to treat it as a rental while it is vacant. That is continue to write-off mortgage interest and my travel to the property etc. until it is sold?
Question 3. Related to question 1, if I can’t use the repairs to create a higher tax basis, can I treat the repairs as expenses to the rental - to write-off on 2019 taxes? Even though they will be occurring in June after the final lease has ended?
I’m basically trying to come up with the best way to continue my tax write-off for the repairs and vacancy after the May 31 lease ends – until the condo is finally sold. Maybe I should advertise it for rent at the same time that repairs, and sales listing is happening?