Tax Accounting for 100K Rental Property Remodel

[Luke H.]

Seeking help/advice on doing accounting on this major remodel.

Tax Accounting for Rental 100K Remodel. In 2019 I started a remodel and finished in it 2020. What are the best ways to handle the expenses, rental income, depreciation in my accounting to keep my tax bill low and maximize all the expenses? I plan to hold this rental for at least 15 years.

Any and all advice is welcomed.
Thank you!

[Michael Plaks]

@Luke H.

The crushing news first. If you finished your remodel in 2020, you will not get any benefits on your 2019 tax return. The entire property was placed in service in 2020, so this is when the depreciation and everything else starts. You have to wait until the next year, sorry.

To prepare for the next year taxes, please itemize your entire rehab expenses as much as possible, as in recording every invoice paid and every store purchase. If you happen to benefit from more depreciation on your 2020 tax return (which is impossible to predict without having your complete 2020 income and expenses for this property) - then you'd need to get professional help analyzing your detailed spreadsheets to maximize depreciation.