Tax issues for converted residence

[Pm Fourchi]

Hello all.

I have researched but can't seem to find an answer to this question.

We've been renting our former residence for 2.5 years. If we sell it in the next six months, we'll qualify for the capital gain exclusion for sale of a residence.

Tenants just moved out and we are getting it ready to list it for sale. Lots of repair, landscape repair, cleaning and painting work to be done to get it ready to show, probably $5,000 or so. I note these are all expenses and not capital improvements.

If we were to continue to rent it, I would conclude that the $5,000 expenses is deductible as a rental property expense. And even if we were not going to continue to rent it but we didn't intend to claim the capital gain exclusion for sale of a residence, I would conclude the same...these would be deductible expenses incurred for an investment property. But the fact that we'll be using the capital gain exclusion for sale of a residence makes me wonder if these expenses cannot be deducted because they are incurred in preparing for the sale of a residence.

Anyone have insight on this?

Would your answer change if we simultaneously listed it for sale and for rent, but ultimately ended up selling it?

Thanks!