Do these expenses qualify for start-up expenses?

[Rick Im]

Hello,

I purchased my first rental property on October 4th. After a month of renovations, I listed it on the market on November 19th and secured a tenant with a lease starting on December 10th. Before this purchase, I had two other properties under contract but had to withdraw due to unfavorable inspection results. Although I recovered my earnest money, these unsuccessful deals resulted in some expenses, such as inspection fees. Can these costs be deducted as start-up expenses?

Additionally, I viewed over 40 properties this year before purchasing my first rental property. Can the travel mileage incurred during this time be included as start-up expenses?

Lastly, my understanding is that repair costs (e.g., fixing leaky pipes) but not capital improvements (e.g., replacing old countertops with new ones) before renting out the property can also be categorized as start-up expenses. Is this correct?

Rick

[Corby Goade]

You should definitely talk to your CPA, which I am not, but...

My understanding is that until you actually have a business, meaning a property in services, nothing can be deducted. I don't believe your mileage or due diligence expenses on other properties can be deducted since you did not have a business yet or any properties in service. 

Any expenses you put in to renovation or repairs are not deductible, but must be capitalized after the property is in service. 

From that point forward, you can expense repairs and maintenance without capitalization.