Rental property tax question

[Ahmed Tausif Aijazi]

Hello all.

I am extremely new to real estate investing and closed a deal recently. It requires some fix-up after which I plan to rent it out. My questions is

1. Can I deduct the fix-up / repair costs on my taxes?

2. If yes, since I bought it in November and the repairs will take a month or so and finding a tenant will take a few more weeks so I am expecting to collect my first rent in January. Is it still possible to put all my repair costs in this year's tax return with a loss, having no income or should it go to next year's return or should I just leave it and do not mention on my tax return?

Any help would be appreciated. Thanks in advance

[Jon Holdman]

Money you spend fixing up the property before its ready to rent can't be deducted at all. Instead, it adds onto your basis and decreases the gain when you sell. Some items can be depreciated quicker than the standard 27.5 years for residential property.

Depending on your AGI, you may be able to use passive losses to offset other income. Only if your AGI is under $150K, though. If AGI is under $100K, you can deduct up to $25K of passive losses against other income. Between $100K and $150K this phases out, $1 less for each $2 in income over $100K. But good rentals don't usually produce passive losses. They actually make money.

I'd strongly recommend finding a CPA who's experienced with rental properties. DIY taxes on rentals will result in you making mistakes. Its a complex topic.