What are Legal Tax Deductions for a Rental Arbitrage LLC when Renovating a Property?

[David H.]

Hi, my LLC is about to start a rehab on a future STR lake house that the LLC will manage via rental arbitrage. The LLC will be renting the property from my father and he is willing to share some of the cost for the rehab and upgrades. The house will stay in my father's name for now, so we want most of the repairs to be paid by him for depreciation purposes (he will be doing cost segregation and taking bonus depreciation later this year). However, the LLC will need to chip-in financially to help complete this renovation.

My general question is what items should the LLC cover and which should my father cover for best tax benefits?

Upgrades/repairs include:
flooring (tile and carpet, entire house),
painting (entire house),
complete kitchen renovation with new appliances, cabinets, sink, lighting
complete bathroom renovations
upgrade/replace AC
upgrade/replace existing hot tub  
upgrade/replace furniture/beds
upgrade/replace old pier with new
add new kayaks, paddle boards, and bikes

I am thinking anything that is removable (furniture, appliances, water toys, bikes, pier, etc) could qualify as an asset for the LLC and thus be used as a tax expense for the LLC. Correct?

As for the permanent upgrades, can the LLC cover and write off items that are considered a repair or upgrade, like painting and flooring, or new AC or hot tub?

We are also re-purposing part of the house which will allow us to add a new bedroom...my sense is this should be paid for by my father since it is a permanent value-add.  Correct?

(Another option to the above scenario is to instead have the LLC lend my father money to complete the rehab so all the repairs are made in his name...but then the LLC would get no tax deductions on the rehab, plus my father would wind up paying interest on the loan and the LLC would incur taxable income on the interest of the loan as well.)

I've said a lot here, but It would be greatly appreciated if anyone can give me advice on the best strategy to pursue...

Thanks!