Filing taxes: when to expense vs capitalize for vacant rental property

[Daniel Loane]

Hi everyone,

I purchased my first rental property in June 2023, and it took until December to prepare it for tenants. I posted the listing on December 12, and my first tenant moved in on December 26th.

As I’m filing my (extended) 2023 taxes, I’d appreciate any advice on what expenses I can deduct and what I should capitalize, especially since the property was mostly vacant. For context, (1) the property was in poor condition when I acquired it, and (2) I’m a passive real estate investor.

Here are my expenses:

• - Travel (~$2,000) and meals during travel ($500)—I understand only 50% of meal costs are deductible.
• - Gardening maintenance (just to prevent the grass from getting too high, not an improvement).
• - In-year tax consultation ($300).
• - Commission to my buyer’s agent ($300).
• - Insurance premium ($1,000).
• - Insurance deductible following a claim ($1,000).

I believe the property won’t begin to depreciate until it’s in service, which seems to align with how TurboTax is set up. If that’s not the case, any clarification would be appreciated!

Lastly, if anyone has recommendations for affordable CPAs in Cleveland or Ohio who could assist me, I would be grateful.

Thank you so much!