Rent expense increase in cost basis?

I'd like to know too, as we are also renting while waiting for renovation to happen.

Also how do I keep track of the cost basis of my co-op apartment anyway? Is there a formal way to report it as in a tax return, or do I just keep all the receipts for works being done to improve it?

I do not know by the book answer. I expect it to be a no.

One way to do this may be to have your contractor bill you for the rent and pay it.

Any contractor who would agree to that is desperate . Hope the IRS isn't monitoring this site.

Assessments that don't go towards capital improvements in the building don't go towards your basis, either.

So who is in charge of keeping track of the cost basis, and what's the process for doing it?

You do. Keep a record of all assessments and coops financials which provide details of capital improvements. Your accountant will tell you the rest.

Thanks 300. And these records are only needed after I sell the apartment and file the next tax return, correct?

Yes. You can deduct anything but the mortgage interest every year for which you will a statement from your bank and from the coop, if the coop has a mortgage. Rest of that is cost basis adjustment which is needed at the time of sale. Receipts or statements need to be kept for audit and need not be submitted - at least that is my understanding. If you sell it, transaction cost and RE taxes at the time of sale eat into your profit and if you are married you get $500k free gain.

Sorry typo. You CANNOT deduct anything.

This question is nutty. Same type of person who would ask if he or she could take a tax deduction on business suits.

Lol. You absolutely cannot deduct rental costs from when you renovated. Check with an accountant, but I'm sure its a no. Would be nice though!

30yrs: I'm not so sure that is correct about special assessments. Generally, IRS will accept adding all special assessments to the cost basis. Its a trade off because you cannot add capital improvements the building makes and pays for from its regular budget (your monthly maintenance fees). Its an easy bright line rule for everyone to follow. When you sell the managing agent will provide a list of all special assessments collected during the period of your ownership and you add that to your cost basis. Clean and simple. Even if part of an assessment went to replenish or increase the reserve fund or to buy a unit in the building to provide to a live-in super or such things. Any other rule would be utterly unworkable. Say the building had budgeting and paid for, through cost savings achieved with a new lower-cost building mortgage, a new roof and upgrade the electrical supply. You can't deduct your share of that when you sell--even if you could figure out how much the building ended up paying for those things. This is why capital expenses are better paid for with assessments than maintenance increases--it helps increase your cost basis when it comes time to sell. Even better, of course, is to not have to increase maintenance or do a special assessment and simply pay for the capital improvements through the regular budget. Some coops are achieving this because mortgages taken out by a coop 10-15 years ago were at higher rates than mortgages that have been available in the last couple of years. When coops refinanced recently, they got lower interest rates. This afforded the luxury of lowering coop monthly expenses, so if the maintenance fees remained constant, there would be a windfall. Those lucky enough to get these windfalls have been able to keep maintenance fees from going up while at the same time paying for renovations of public spaces or other capital projects in addition to padding the reserve funds.

kylewest,
So what you are saying is that if a Coop has maintenance which doesn't cover expenses so they periodically male up for that with a special assessment that shareholders can ad that to their cost basis?

Yup. An accountant may be able to further clarify, but as a general rule upon sale of an apartment and the seller is figuring out the cost-basis, coop special assessments can be included. That's my understanding. Very open to an accountant clarifying that further but I've literally seen this done many times and never produced a problem with the IRS.

If that was the case then every Coop should cut their maintenance in half and call half maintenance and half "assessment", or at least never increase their maintenance but simply add assessments.

http://query.nytimes.com/gst/fullpage.html?res=9D03E2D81630F932A35753C1A9609C8B63
"This assumes that the board has complied with Internal Revenue Service guidelines. Mr. Appelbaum said that under I.R.S. regulations affirmed in numerous court decisions, the board must pass a resolution and notify unit owners that the funds being raised will be used for capital improvements only and not for operating expenses or ordinary repairs."

I find kylewest's advice, and his basis for such advice, to be remarkable.