What can I deduct from my taxes prior to putting a VR online?

Question

Hi all,

I have put my vacation house on VRBO/Airbnb and would like to know if I can deduct the work I put into it prior to renting?  We purchased a bunch of PAX units to store our belongings in 2016 and installed them early 2017.  In addition, we painted, cleaned, repaired (and bought a 4plex in the middle of it).  So as 2017 ended we have spent roughly 7K and rented the cabin less than 14 days this year.   We are off to a great start in 2018 with 22 days rented so far.

As I understand it, we don't even need to declare the 10 days it was rented in 2017, but we would like to take these deductions if possible, to offset long-term rental earnings elsewhere.

I'm in the process of finally finding a CPA to help me, but thought I would ask here in case someone has an answer to my question.  Also, if you have a good CPA in the Oakland or general Bay Area, I'd love to have their contact info.

Gratefully,

Anne

Anne Dahl · Answer

Thank you Ashish,

We used the property as a vacation home for 8 years, including 2017, although it was more working on it than enjoying it at that point.

I am horrible with tax language, but basically you are saying I can take the total spent to get it rental ready as a depreciation expense, right?

Thank you for answering my question!

Anne

Ashish Acharya · Answer

@Anne Dahl ,

Did you personally use the house in 2017? if not, it is not vacation home but a rental property or more like trade or business property for Airbnb.

Since you rented less than 14 Looks like you would be better off adding the expense to the basis of the property for all the work you did before putting the property in service and not declaring any income. You will recover the basis via depreciation.

There is more to it but you will need to provide more detail to your CPA.

Good luck