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?


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 ½ 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.

Don't you think it's time to have your income tax returns prepared by a professional preparer? That's 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.

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