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Question
We live in FL.  
We are moving and will be converting our current primary residence into a rental unit.  The home needs a little TLC:  New floors in one room and painting.

When can this work be done and considered repairs on the rental (for taxes) and not just 'home improvements'.

Do we need to have closed on the new home? Signed a management agreement with a property manger? We would like these costs to be against the rental, but want to minimize the time the home is vacant.

Thanks in advance for your help.
Carolyn

Answer
Carolyn,

Thanks for your question.

The repairs can be counted against the rental once it is no longer your residence.  However, some of the items you mentioned are considered improvements rather than repairs.  An improvement must be capitalized and depreciated over it's useful life.  This article is a good overview of the diference.  http://landlords.about.com/od/TaxTips/a/Improvements-Vs-Repairs.htm. So the improvements add to your basis in the house.

I would also add that, in depreciating the house for tax purposes, your basis is the fair market value at the time it becomes a rental or your cost basis, whichever is lower.  Be sure to subtract out the value of the land, as it is not depreciable.

Hope this helps.

John Stancil, CPA

Tax Law (Questions About Taxes)

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John Stancil, CPA

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I can answer questions on personal income taxes, partnerships, and some corporate income taxes. I can deal with some state tax questions. Limited gift and estate tax questions. I am also familiar with ministerial and church tax reporting issues. I am Professor Emeritus at Florida Southern College. Sales taxes and property taxes are state and local issues so I am not likely be be able to give you an in depth answer on those types of taxes. I have maintained a CPA practice, specializing in tax, for over 35 years. I am a member of the National Association of Tax Professionals, The Florida Insititute of CPA's, The NCPE Fellowship. In addition I am a Certified Mentor for SCORE. Visit my website at www.mybaldcpa.com. I also offer seminars and consultations to churches and clergy on their tax issues at www.churchtaxsolutions.com Also visit my blog, www.thetaxdocspot.com. I am listed on Tax Connections at https://www.taxconnections.com/profile/John-Stancil/12258973 Prepare and file your own taxes at www.1040stancilcpa.com

Experience

I hold a doctorate in Accounting, and am a CPA. My certifications of CIA, CFM, and CMA are inactive. I passed all certification examinations on the first attempt, and received honorable mention for my scores on the CIA exam. I have operated a CPA firm for over 37 years and have taught accounting and tax at the college level for over 35 years.

Organizations
FICPA, NATP, NCPE Fellowship, Lakeland Business Leaders

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The CPA Journal, Florida CPA Today, Green Consumer, Green Business, Global Sustainability as a Business Imperative, Palmetto Review, NATP TaxPro Quarterly, Mustang Journal of Finance and Accounting.

Education/Credentials
DBA University of Memphis MBA University of Georgia BS in Accounting Mars Hill University

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