Utilities and Interest during remodel Basis or year deduction

[Michael Overall]

Good day, I bought my first 2 properties in 2024. I purchased then started the remodel before trying to rent. One was completed and rented in OCT, the other I am not done with and will be in service Feb 2025.  I understand the basis is all the remodel cost or labor and materials.  I turned on utilities and kept them till the tenant took over on the one and still have the other.  I also paid interest on the loans.

Is the utilities for the house that is completed and rented a expense deduction for the year or does it go into the basis?

Is the utilities for the house that is still vacant an expense deduction for the year or does it go into the basis when completed?

Is the interest for the house that is completed and rented a expense deduction for the year or does it go into the basis?

Is the interest for the house that is still vacant an expense deduction for the year or does it go into the basis when completed?

Thanks for the help.

[Michael Plaks]

@Michael Overall

Your question is good. My answer won't be, and for two reasons. The first is that there's no consensus between tax professionals, and the second is that you will not like my personal interpretation.

My interpretation is:
Until the property is "placed in service" - everything goes into basis.

Illustration.
You buy a property July 1st.
You finish rehab November 1st and put the property on the market.
Your tenant moves in January 15th.

The property was placed in service November 1st, and it does not matter that the tenant did not move in until the next year.

Everything paid between July 1st and November 1st, including interest and utilities, goes into basis. Everything paid starting from November 1st is deductible.

Now, to the controversy that I mentioned, and ONLY if you really want to go down this rabbit hole. Your question has been debated between BP tax experts both privately and publicly, for example here: 
https://www.biggerpockets.com/forums/51/topics/819991-expens...
And we ended up where we started: no consensus and no clarity.

There have also been court decisions that support my interpretation, even though I personally find these court decisions debatable. (Mears, 2013 referencing Wilson, 2002 - for my curious colleagues). But I choose to rely on these court decisions. My colleagues may choose a different position.