Repairs to new duplex

[Troy B.]

I just bought a duplex which one was rented and one not. Both units where in need of some repairs but I'm not sure what is a tax deduction and what I have to depreciate. I know the painting and cleaning can be deducted and that anything that adds value to the property is a improvement but it seems very confusing. For example the linoleum was ripped bad in places, the shower surround was cracked and all the faucets had leaky valves. These expenses just couldn't be repaired and had to be replaced. Would these then be deductions or still considered improvements?

[Dave Toelkes]

Troy,

You have a timing issue.

Anything done to get the property rent ready is an adjustment to basis and depreciated. Repairs done after the property is in service can be expensed.

If you are willing to push the envelope, I suggest you replace the flooring and tub surround since these are depreciable improvements anyway, even if the unit is in service. Once you have done that, start advertising the property for rent. Now that the property is in service and while you are showing a vacant unit, take care of the painting, cleaning, and leaky faucets as repairs that can be expensed.