Tax strategies on first rental property

[Puja Devi]

Hi all - wanted your input on the following.

I closed on my first OOS rental property 12/31/2021 (signed paperwork with notary) but the funds didn't settle until the new year. So on the CD, closing date is still 12/31/21 but in actuality, I fully closed on mortgage 1/3/2022. Am I  able to deduct some of the closing costs for 2021 taxes because that's what's written on paper? Or can I wait until 2022 to claim them - and by then, I'll have rental income and other associated expenses?

For 2021, since I didn't have any rental income, nor any other operating expenses, the standard 12k deductions would be my best option. But if I can deduct the closing costs in 2022 that would help lower my taxable income markedly. Just wondering what year I'd be able to expense these closing costs specifically.

Thanks!

[Natalie Kolodij]

Since this is OOS I'm assuming it's purely a rental. 

Rental income/ write offs are unrelated ot your standard eduction/itemized deductions. Two totally separate categories. 

Standard v. itemized= personal

Schedule E rental write offs= business

Since the rental wasn't really ready or available for rent in 2021 those costs will carry over. Closing costs, ect will all capitalize into the depreciable basis of the rental. 

They're never a write off in the year incurred.