Sold SFH Rental Property. Questions on improvements.

[Michael Anderson]

Hi everyone. I recently sold a SFH rental property to capitalize on the current market. This is the situation:

6 year tenant moved out. Repairs had to be done, including flooring, paint and some plumbing. After the work was done, we decided to sell the property instead of rent to new tenant. 

Question: Should I offset the rental income with the repairs? Or use the repair expense to offset the Gross Sale amount of the house?

Thanks!!

[Ashish Acharya]

Rental income as that will be taxed as ordinary income. The gain will be cap gain. 

However, there are other factors involved to make that determination, and the end result may be the same with both approaches depending on what is going on with your personal situation.