Couple of questions…
1 - What are the differences regarding renovation expenses vs repair expenses? Specifically, I’m wondering if renovations only get added to my cost basis and only come into play when selling?
2 - I just bought my rental unit this year, so I have all the usual expenses associated with buying (inspection, lawyers, closing fees, etc). Is all of that able to be deducted as expenses for this year?
renovations are added to basis. classify as much as you can as repairs, to reduce current year taxes. (renovations are treated differently for rehabs and flips)
all of the expenses are treated somewhere. some are added to basis (legal fees, recording fees, title insurance, surveys, junk fees, appraisal, back taxes, commissions) , others are expensed in the year purchased (interest, prorated taxes paid at closing, insurance). Points and origination fees are not added to basis, but are deducted over the life of the loan, rather than expensed in the year purchased.
Pub 551 may help you.
Thank you.
I will check out Pub 551… whatever that is.
;D
Got it… thanks.
(I love google)
I’m always impressed by your knowledge, but I was always under the impression that points are deductable on a purchase, but on a refi they need to be spread out over the life of the loan. I believe this is mentioned in pub 936.
Only if it’s your home - and you meet all the other conditions. This is a rental.