Rental Property- Owner Moved back in- Fix up expenses

[Taxadvisor VA]

Client rented his property for a few years and now has decided to move back in.

I would think that general expenses to fix it up would be deductible on his Schedule E or would these be considered personal?

Expenses:

* Interior paint.
* Cabinet painting.

The other expenditures covered.

* Carpet.
* Hardwood floor.
* Dishwasher.
* Vent Hood.
* Counter-tops.

Anybody have this situation before?

Thanks for your help.

Taxadvisor VA

[taxmom34]

if client moved back in it is now personal property, his principal residence. no longer rental property so no expenses to deduct. i would add the hardwood floor and counter tops to basis (it would be considered an improvement to personal residence)

[Traveling EA]

The OP did not indicate this, but if the tenent trashed the home, and it needed to be brought up the the same shape as it was at the time it was first rented, I would think those expenses would be deductible, but not the the capital improvements.

[Roland Slugg]

Agree with Traveling EA. Repairs to restore the property to its pre-rental condition are deductible. For some of the expenses ... Carpet, Hardwood floor, Dishwasher, etc. ... reasonable allocations should be made based on the facts and circumstances of each item. Also, ongoing expenses such as water, trash collection, utilities, lawn mowing would be deductible for periods before the owner moved in or took the property off the rental market.

[ddoshan]

Debateable but looks sort of personal to me. Did they just decide to quit renting the home and now want to fix it up a little for their own personal use.

[ChEAr$]

With further discussions with client, outlining what are schedule e repairs, which are capital in nature, which may be personal in nature. etc etc.
The soon to be former client might not agree and will at least have a better understanding of how to tell it to the future and new preparer.
(Did I explain that right? (grin))?

[taxea]

The repairs were made due to lack of upkeep by the tenant some may be deductible on final Sch E. Some should have been covered by the deposit, others by small claims against the client. None of the improvements are Sch E deductible. They are personal in nature. The only deductibility there would be if the items were severely damaged by the renter and in that case, had the damage been replaced with like materials there could be a case for a SCH E expense.

[Taxadvisor VA]

With further discussions with client, outlining what are schedule e repairs, which are capital in nature, which may be personal in nature. etc etc.
The soon to be former client might not agree and will at least have a better understanding of how to tell it to the future and new preparer.
(Did I explain that right? (grin))?

ChEAr$,

Good comment as I already explained it to the client and they are on board.

Fix up expenses to restore to what it was before while capital improvements get added to the basis.

Thanks again,

Doug

[Taxadvisor VA]

if client moved back in it is now personal property, his principal residence. no longer rental property so no expenses to deduct. i would add the hardwood floor and counter tops to basis (it would be considered an improvement to personal residence)

Totally on board with capital improvements but not fix up expenses to get it back to what property looked like before renting.

Thanks,

Taxadvisor VA

[Taxadvisor VA]

The OP did not indicate this, but if the tenent trashed the home, and it needed to be brought up the the same shape as it was at the time it was first rented, I would think those expenses would be deductible, but not the the capital improvements.

I agree which is the way that I'm headed.

Thanks,

Taxadvisor VA