Today TaxMama hears from Anne in New Jersey with this problem. “My tenant was evicted on 6/30/09. She left owing $4,000 in back rent – and she vandalized the townhouse. So far, I have spent $13,000 in repairs (contractor fees and supplies) to bring the townhouse into rentable condition. Can I claim the $13,000 on my income tax?”
You have my total sympathy.
Having spent over a decade managing residential and commercial property, I have learned that it pays to spend the extra time and resources to do a thorough background check on prospective tenants.
This could still happen…at least the financial disaster part – but not the nasty vandalism, when you have fundamentally good people in the house.
As to the expenses? Clearly, they are repairs. Not remodels.
Keep photos of the original damage and what you had to repair it. Take the deduction as repairs. Include a statement with your tax return explaining the eviction and vandalism.
You’ll be fine.
I hope the new tenant works out!
And that you can recoup some of your money from insurance or the past tenant. After all, you have a judgment as part of the eviction process.
And remember, you can find answers to all kinds of questions about rental properties and other tax issues, free. Where? Where else? At TaxMama.com.[Note: If you were subscribed to the e-mailed TaxQuips, you’d be getting other exciting news and tips by e-mail, that never appear on the site. Please click on the subscribe link and join us.]
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