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Can I get a tax break for improvements to a rental?

August 21, 2008


From:  Tom
Date:  26 Jun 2008

If I convert my California home to income, can I write off the cost of improving or adding onto it against any income? Since the improvements will be more than ten times the expected rent, can I average out over time? What will I need to do to make the home owner-occupied to use the $500,000 exclusion?

Answer

Date:  03 Jul 2008

Hello Tom,

Improvements to your home that is converted to rental property are capitalized and depreciated. If the improvements are for a residential building, the depreciation is claimed over a 27 Ĺ year period. Land improvements are depreciated over a 15 year period.

How to qualify for the exclusion from sale of a residence depends on how long you rent the property before you want to sell it.

Donít you think itís time to have your income tax returns prepared by a professional preparer? Thatís our business!

See IRS Publication 523, Selling Your Home, and IRS Publication 527, Residential Rental Property.

Good luck!
Mike Gray

We have more answers to frequently asked real estate tax questions! We also offer up-to-date information about new tax real estate tax developments in Michael Gray, CPA's Real Estate Tax Letter.

IRS Circular 230 Disclosure: As required by U.S. Treasury Regulations, you are hereby advised that any written tax advice contained on this website was not written or intended to be used (and cannot be used) by any taxpayer for the purpose of avoiding penalties that may be imposed under the U.S. Internal Revenue Code.

Can I get a tax break for improvements to a rental?

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