Real estate and tax in San Bernardino
San Bernardino investment property is usually bought, improved, and then rented — which puts the repair-versus-improvement line at the centre of the file.
What this looks like in San Bernardino
Costs that restore a property to working order can generally be deducted in the year they are incurred. Costs that better it, restore it after a casualty, or adapt it to a new use must be capitalised and recovered over years. On a rehabilitated older house, most of the invoices sit near that line.
Where the line was drawn wrongly in earlier years, the correction is often a change in accounting method going forward rather than a set of amended returns — which is generally the better outcome for the taxpayer.
What gets examined
- Each rehabilitation invoice tested against the repair-versus-improvement standard
- Whether prior-year treatment needs correcting, and by which mechanism
- When the property was actually placed in service as a rental
Common questions
- I rehabbed a San Bernardino house before renting it. Can I deduct the work?
- Work done to prepare a property for its first rental use is generally capitalised into basis rather than deducted, because it happens before the property is placed in service. Repairs during a later rental period are treated differently. The placed-in-service date therefore does a lot of work in this analysis, and it is worth establishing clearly at the time rather than later.
- Do you serve clients in San Bernardino County as well as Riverside County?
- Yes. The office is in Riverside and serves both counties. The practical difference between them is administrative — each county has its own assessor, and transfer and exclusion filings go to the county where the property sits.
How real estate and tax works in full|Everything in San Bernardino
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