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Old 12-18-2016, 05:41 PM
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Red face Inherited House - are there tax deductions for repairs/improvements?

I inherited a house that's been in my possession a couple years now although I haven't lived in it and it's been vacant. It needs extensive repairs to sell it ($15000 in plumbing, electrical, pest treatment, ancient appliances need replacement). Are any/all of these repairs/replacements tax deductible after sale?

Would adding a vapor barrier and duct insulation in crawlspace be considered a repair? it is customarily done, but was not done and the heating system is not working well as a result.
Thanks,
Lynn



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Old 12-19-2016, 03:41 PM
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I inherited a house that's been in my possession a couple years now although I haven't lived in it and it's been vacant. It needs extensive repairs to sell it ($15000 in plumbing, electrical, pest treatment, ancient appliances need replacement). Are any/all of these repairs/replacements tax deductible after sale?=======>yes and no; the IRS won't let you deduct expenses that you incur to take care of your personal residence.the first thing to note is that expenses for making the house ready to sell can be listed as selling expenses . But it is important to note the distinction between improvements on the one hand, and repairs and maintenance on the other.. Improvements are more or less permanent changes to the house. These get added to your basis. New tile would generally fall into that category. But painting and general repairs are more likely to fall under "repairs and maintenance." Repairs to your personal residence are never tax-deductible. Capital improvements, though, can reduce your taxes in the long run. The rules to determine whether what you do to your house is a repair or a capital improvement can be complicated, but the general rule of thumb is that repairs fix things while capital improvements make your house worth more, expand its use or make it last longer. For example, replacing a few faulty roof shingles is a repair. Installing a new long-lasting metal roof system is a capital improvement. The rules are different if you have an investment property or if you have a home office in your personal residence, which effectively turns that portion of your home into an investment property. You can deduct the entire cost of the repair against your rental income for an investment property. For a home office, you can claim a share of the repair cost that corresponds to your home office's share of your house as a part of your home office deduction.



Would adding a vapor barrier and duct insulation in crawlspace be considered a repair? it is customarily done, but was not done and the heating system is not working well as a result.======>as mentioned above; The IRS indicates what constitutes a real property capital improvement;Fixing a defect or design flaw;Creating an addition, physical enlargement or expansion;Creating an increase in capacity, productivity or efficiency;Rebuilding property after the end of its economic useful life;Replacing a major component or structural part of the property;Adapting property to a new or different use



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Old 12-19-2016, 11:10 PM
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Thank you!



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