Question: I recently made some renovations to my rental property. I understand that these are tax deductible. What are the guidelines?
Answer: It all depends on the type of renovation. The cost of a general repair that is designed to keep the property in good working condition and does not add to the value of it is deductible. An improvement, on the other hand, is not tax deductible. In other words, anything that adds to the value of the property, prolongs its useful life and or adapts it to new uses is not deductible and must be depreciated, this includes any “repairs” that are part of an extensive remodeling project and or restoration.
As always, remember to consult with a competent tax professional.