Remodel and Taxes--Repairs vs improvements

[David Weskamp]

Hello,

I met with my CPA yesterday and we discussed my rental portfolio and remodels completed on recently purchased properties.

She asked whether these were repairs or improvements.  Apparently you can deduct repairs, but not improvements ( this depreciates over the 27.5 years).

Well, of course I want repairs, so I can deduct. 

Has anyone had any experience with not being able to deduct remodel costs. Did you have to show the difference on what was a repair and what was an improvement?

For example: I bought a home for $70k put 25K in rehab. I would assume i could deduct $25k on taxes to off set a couple sold properties and rental income.   

Thanks for any help,

Dave Weskamp

[Ashish Acharya]

That is correct. If you can itemize the 25k into let's say appliances and such, you can take 100% bonus depreciation on the appliance and such.