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Updated almost 6 years ago on . Most recent reply

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7
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Libo L.
1
Votes |
7
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start up and tax implication

Libo L.
Posted

Hi, I am a rookie and would appreciate very much some help with preparing my 2018 taxes. I imagine many folks who start out  have similar questions and experiences. 

In December 2017 and early 2018, I looked at some houses in a different state with the intention to buy one and rent it out right away, which led to purchasing a rental house in February 2018, and after some repair and renovation, I placed my first for-rent advertisement in March 2018. 

Questions: 

1) How should I treat my expenses in December 2017, which included travels, home inspection of a house I didn't end up buying? Should I include those expenses towards calculating my cost basis for purchasing this property (therefore, they matter only when I sell the property in the future, but don't matter for figuring out my 2018 taxes)? 

2) From January 1, 2018 but before purchasing the property in February 2018, I also had some expenses for activities which directly led to the purchase, including travels, home inspections, etc. Can these expenses be treated as start-up expenses that I can deduct for my 2018 taxes? Or do they have to be treated as part of the cost basis for purchasing the property?

3) For purchasing the property itself, I had the usual expenses associated with buying a home, such as appraisal fee, home inspection, title insurance, real estate transaction tax (recording fee and stamp taxes), load application/administration fee. Do I treat these expenses as part of the cost basis for purchasing the property, or do I treat them as part of the start-up expense that I can deduct for my 2018 taxes? 

4) After purchasing the property in February but before advertising it for rent, I had expenses in getting the house ready for rent, such as painting, new carpeting (not the entire house but a few rooms with worn and dirty carpets). Are these expenses part of the cost basis for purchasing the property (therefore not deductible for 2018 taxes) or part of the start-up expense that I can deduct for my 2018 taxes? 

I don't have much time left before April 15, would very much appreciate your input. 

Thank you.

Libo

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