Question

How to deduct repair expense for a rental property sold in 2021

Forum|Forum|4 years ago
April 9, 2022
1 reply
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I sold my rental property in 2021. The property was not rented at all in 2021, instead I spent money for repairs before I sold it. How do I deduct the cost of the repair if this property was not rented in 2021?

Carl11_2

Employee

Repair expenses are only deductible if the cost is incurred while the property is classified as a rental. Understand the program doesn't have to be rented. It has to be "classified as a rental", meaning that you were renting or attempting to rent the property. If you were not at least attempting to rent the property in 2021, then it can't remain classified as a rental and the sale can't be reported correctly, in the rental property section of the program. It needs to be reported in the Sale of Business Property section.

Also, do not mix/confuse repair expenses with property improvements. They are two completely separate beasts.