24 Unit Complex - Vacant - Renovating

[Lorraine Brock]

We purchased a 24 unit apartment complex. No renters. We are renovating it. We purchased in 11/18 and had a lot of expenses in 2018 AC, electric, etc. My tax person is saying we can not deduct any of those expenses on our 2018 taxes because we had no tenants but can next year in 2019 when we have tenants. I have never used this person before and wanted to get some feedback. I am tying to avoid Capital Gains tax by off setting it with the improvements we have made in 2018. 

[Chase McArthur]

@Lorraine Brock

Did you prelease?

Often times its best to begin marketing the property for tenants as soon as you close the deal. Doing this creates tenable cash flow during renovations from which deductions for capex can be made for that fiscal year. As @Oleg Shalumov said, if theres no cash flow being produced from the property, theres nothing from which to deduct.