Renovations and Capital Expenses
Tax treatment of renovations and repairs on real estate must distinguish between current and capital expenses. These broad "buckets" are important to determine. Current expenses can be fully deducted in the year incurred to provide immediate tax relief by reducing net rental income. Capital expenses can be added to the adjusted cost basis of the property.
These issues can get very complicated and there is never an exact answer to encompass everyone's individual scenario. To read more about this, click here.