First rental not ready for service but ready to file my taxes

[Dominic S.]

Hello All,

I bought a property in March 2012 for the purpose of renting it out. I spent the rest of the year fixing it up and I put the house in "in service" (For Rent sign in the yard) on December 15.

I'm trying to use TurboTax Premier instead of a CPA and it's proving to be a huge learning curve. But I'm finding everything interesting and don't want to wave the white flag!

From what I've learned, because the house wasn't in service for all of 2012 (except for the last two weeks), I should take the fix up costs, my fees at closing, utilities, and insurance and capitalize these. Or in other words, add them to the cost basis of the house for depreciation. And then take the 2012 property taxes and add this to my schedule A. Is this correct so far?

Expanding on that:

Can I separate some of the fix up costs like flooring, the new hot water heater, the new fridge, etc and make each of these separate assets for their own depreciation.

Is the initial cost basis for the house the fair market value minus the assessed value from my property tax statement? Or do I take my purchase price into account?

Thanks in advance!