Are rehab cost tax deductible for the LLC im using?

[David Balogun]

I wanted to know do rehabbers get to write off all the expenses for a property? Does it matter if it's a fix and hold as oppose to fix and flip?

[Michael Plaks]

@David Balogun

Need to define "rehabbers." To me, this term means a flipper: someone who buys, fixes and sells. If the property is bought and sold in the same year, it ends up being deducted. If you bought it this year and will not sell until next year, then all expenses are stacked up and deducted against the sale price when sold next year, not this year. 

If you're a landlord who buys distressed properties in need of major rehab - that rehab is not normally deducted. It is added to the cost of buying the property and then depreciated when the rehab is finished and the property is placed in service. Some parts of the rehab (carpets and appliances, for example) may be deductible once you placed the property in service, but this gets complicated.