| It seems that your property was a rental property for part of tax year 2008 up until September 2008, and thereafter it become a personal residence. So, the issue of being able to deduct the cost of fixing the home becomes one of a timing issue! Did you initiate the work whilst the property was not occupied by you and if so, CPA's may choose to deduct these so called repair expenses on Schedule E.
But, if these expenses were incurred whilst you occupied the home, then they are not deductible on Schedule E and instead are to be capitalized and added to the basis of your home. In other words, they would not get expensed in 2008.
If the mortgage expense and property taxes are more than the rental income during the period Jan 08 thru to Sept 08, the excess of expenses over the rental income will generate rental real estate losses. These rental real losses are subject to passive activity loss limitations, namely if your adjusted gross income exceeds $150,000 they are not deductible. |