Painting a rental property is not usually a depreciable expense. In most cases, however, you can write it off as a deductible business expense instead. The IRS divides any work you put in on your rental into improvements and repairs. You claim the total cost of repairs on your taxes, but depreciate improvements.
Improvements Vs. Repairs
The IRS defines improvements as projects that increase the value of the property or lengthen its life, such as a new kitchen or a new roof. You write off the cost of improvements on your taxes by depreciating them over 27.5 years. Repairs are projects that bring the rental back up to a usable level: Plumbing jobs, painting, fixing broken windows and fixing broken stairs. The only time you get to depreciate repairs is if they're part of an improvement: Painting a new wing of the house, or replacing the paint when you remodel the kitchen would qualify.
If you hire someone to paint the house, his fee is your deductible expense. If you do the job yourself, you deduct the cost of your paint and other supplies, and the cost of transportation. Trips from your home to the paint store and the house are deductible, either by claiming the actual cost or deducting a standard per-mile rate. If you reporting rental income on a cash basis, as most owners do, you claim the deduction in the same tax year you pay the bill for repairs.
Any day on which you or your family members stay at the rental, or you let someone else stay there at less than a full price, counts as a personal-use day. If your personal use lasts more than two weeks of the year or more than 10 percent of the rental use -- whichever figure is greater -- you have to divide expenses, such as painting, between personal and rental uses. If you vacation there 30 percent of the year, you can only deduct 70 percent of the painting cost.
If you rent for less than 15 days of the year, you don't report rental income or the rental expenses on your taxes. If you rent for 15 days or more but you have a net loss, you can't usually write off the loss against non-rental income. The IRS classes renting as a passive activity, so if you run in the red, you have to deduct it from other passive activities, such as income from another rental. If you can't deduct it all, carry the excess loss to next year and try to claim it then.
A graduate of Oberlin College, Fraser Sherman began writing in 1981. Since then he's researched and written newspaper and magazine stories on city government, court cases, business, real estate and finance, the uses of new technologies and film history. Sherman has worked for more than a decade as a newspaper reporter, and his magazine articles have been published in "Newsweek," "Air & Space," "Backpacker" and "Boys' Life." Sherman is also the author of three film reference books, with a fourth currently under way.